Thursday, March 21, 2002

Kmart can keep on selling Martha and Mickey items




The Associated Press

        CHICAGO — The sheets, towels and kids' clothing made by Martha Stewart and Disney will stay on Kmart shelves after the discount retailer Wednesday got bankruptcy court approval to continue its licensing agreements with its five major brands.

        U.S. Bankruptcy Judge Susan Pierson Sonderby approved Kmart's request to continue its agreements and pay outstanding accounts with Martha Stewart Living Omnimedia Inc.; Disney Enterprises Inc.; G.H. Productions Inc., which supplies its Jaclyn Smith line; Joe Boxer Licensing LLC; and Kathy Ireland World Wide LLC.

        Kmart owes $131,735 to Kathy Ireland, $1.1 million to G.H. Productions and $12.3 million to Martha Stewart.

        Kmart chairman and chief executive James Adamson said getting the judge's approval was a key victory for the discount retailer in its restructuring efforts. Mr. Adamson said the brands are what makes Kmart stand out from its competitors.

        “You always look for items of (difference) to give you a competitive edge,” Mr. Adamson said.

        Kmart said in court Wednesday that the five brands account for roughly $2.7 billion annually in gross sales.

        Troy, Mich.-based Kmart has struggled to compete with discount competitors Wal-Mart Stores Inc. and Target Corp. Kmart filed for Chapter 11 bankruptcy protection on Jan. 22 after disappointing holiday sales and a stock dive.

        Kmart also is seeking approval to begin its going out of business sales for its closing stores and to get approval for the group of agents who will conduct the liquidation. Kmart announced March 8 that it will close 284 stores, cutting 22,000 jobs.

        The store closings will give the company much-needed cash that could be used to focus on revamping remaining stores. Kmart said it expects the savings from store closings to be about $550 million in 2002 and about $45 million annually after that.

        But the closings could hurt Kmart landlords, especially where Kmart is the anchor tenant of a strip mall.

        The judge approved Kmart's motion Wednesday to get out of its NASCAR sponsorship agreement with Haas-Carter Motorsports.

        Kmart had sponsored two Haas-Carter cars, the No. 66 driven by Todd Bodine and the No. 26 driven by Joe Nemechek. The Kmart logo hasn't been on either car since Feb. 24.

       



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