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Stewart to end Kmart deal?
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January 16, 2002: 6:58 a.m. ET
Designer reportedly may end merchandising deal with troubled retailer.
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NEW YORK (CNN/Money) - Martha Stewart may end her deal with Kmart Corp. in a move that could take away a key line of merchandise from the troubled discount retailer, a newspaper reported Wednesday.
The Wall Street Journal, citing the housekeeping expert's contract with Kmart, said Martha Stewart Living Omnimedia Inc. (MSO: Research, Estimates) could pull out of its merchandising deal if the beleaguered No. 2 U.S. discount retailer files for Chapter 11 bankruptcy protection.
Meanwhile, Kmart (KM: Research, Estimates) will be removed from the Standard and Poor's 500 index after the close of trading Wednesday. S&P says the move is being made because of the retailer's low stock price and its financial instability. Kmart shares dropped another 14 percent to $2.45 Tuesday.
Kmart's board of directors met Tuesday to discuss financial options, perhaps even bankruptcy, as Kmart's stock closed near a 34-year low amid concerns over its financing and difficulties competing against Wal-Mart Stores Inc. (WMT: Research, Estimates) , the world's biggest retailer.
Martha Stewart's company is Kmart's most important supplier, providing bedding, bath towels, dishes, baby gifts and other products with the Stewart name on them. Sales of Martha Stewart goods hit $1.5 billion last year out of annual sales of about $40 billion, the report said.
Kmart, already in the midst of a $2 billion restructuring, has said it may need additional financing from banks after months of weak sales, particularly after the critical Christmas shopping season. 
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