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Martha’s Everyday minimums
July 27, 2007
Martha Stewart has 65 million good reasons to keep her Kmart ‘Everyday’ array looking good, even as the spotlight swings dramatically onto her ‘Collection’ program at Macy’s.
Or, does she?
In her company’s contract with Kmart, $65 million is the minimum guarantee on royalties due to MSLO for the year ending January 31, 2008. That’s this year.
Last year, based on actual retail sales at Kmart, the earned royalty was $29.9 million – against the contractual minimum guarantee of $59.0 million.
Call the result a $29.1 million positive adjustment for Martha. That’s nice work, if you can get it!
So, based on how that worked out, maybe she only has half as many good reasons to keep Everyday in prime shape this year.
Next year: different story. The minimums will drop to $20 million for retail year 2008 and $15 million for 2009. (Martha can also anticipate as much as $10 million in previously deferred annual minimums to be collected during the 2008 and 2009 retail years.)
Now, if you are Kmart/Sears chairman Eddie Lampert, you already have at least 29.1 million reasons to demand better merchandising from Martha.
Or, do you?
Maybe, if you’re Eddie, you make other plans – like turning Terry’s Martha into your Martha.
Posted by James Mammarella on July 27, 2007 | Comments (0)
