Macy’s, Home Depot to Make up for Martha’s lost Kmart Biz

-- Home Textiles Today, 2/22/2010 12:00:00 AM

New York —

Now that the Martha Stewart Everyday Program at Kmart has concluded, Martha Stewart Living Omnimedia expects upcoming expansions at Macy’s and Home Depot will eventually make up for the $1 billion business it once enjoyed with the discounter.

MSLO received its final royalty and minimum in January, an amount characterized as less than $2 million during the company’s earnings call last week. During the fourth quarter, MSLO realized $10 million in previously deferred Kmart royalties as non-cash revenue as well as a $3 million cash payment, the company reported.

The Macy’s and Home Depot royalties and minimums will replace the Kmart money in less than three years, with business at the department stores and home center ramping up this year and hitting stride in 2011, executives said. Additional merchandising business with a variety of retailers and suppliers is considered add-on business, according to Charles Koppelman, executive chairman and principal executive officer.

“It is a new decade for the merchandising group,” said Robin Marino, president and ceo of MSLO’s merchandising division.

This year, Macy’s will introduce a new opening price point program in Martha Stewart Collection called Essentials. In addition, the retailer next month will roll out Stewart-branded mattresses in 410 doors.

Although MSLO does not break out actual sales figures for Macy’s — contrary to its practice for many years with Kmart — Marino described fourth-quarter sales there as “particularly strong.” The company said the program recorded year-over-year sales gains at the department store in 2009.

Home Depot last month launched a Martha Stewart Living line of outdoor furniture as well as Martha Stewart Clean all-natural cleaning solutions. Paint will debut paint next month. Over the year the brand will expand into “many, many categories,” she said.

“We want to be everywhere at Home Depot,” she added.

Also in the pipeline is the rollout at Martha Stewart Pets at PetSmart, a program of 250 skus. A debut last week on QVC in the United Kingdom has the company “very excited about the possibilities that home shopping represents for our brand,” said Marino.

The company also plans to expand in grocery and the wedding sector in the United States and is looking at international opportunities, according to executives.

Operating income from the merchandising division more than doubled during the quarter ended Dec. 31 to $24.6 million from $9.3 million in the year-ago quarter. Revenues rose 8.4% to $25.7 million.

For the year, operating income in the merchandising division fell 7.2% to $25.7 million. Merchandising revenues declined 10.1% to $52.6 million.