Attempt to add Stewart's housewares line at Sears stores fails
HOFFMAN ESTATES, Ill. - The talks between Eddie and Martha have broken down.
Sears Holdings Corp. Chairman Edward Lampert acknowledged as much Wednesday, saying customers won't be seeing Martha Stewart's housewares in Sears stores because the two sides haven't been able to come to terms.
"We've tried to have a bigger relationship with them, and we haven't been successful," Lampert told reporters after Hoffman Estates-based Sears Holdings' annual meeting. "Maybe they don't like us anymore," he added, referring to Stewart's recently announced plans to design a more upscale line of housewares for Macy's, the national department store chain.
Expanding distribution of Kmart's popular Martha Stewart Everyday line to Sears was supposed to be one of the major synergies behind Kmart's acquisition of Sears, Roebuck and Co. last year. Stewart's array of home goods was Kmart's best-known exclusive brand, and one of the few things the struggling chain had going for it.
But Stewart's long-term contract with Kmart contained rich guarantees that Lampert was trying to renegotiate in exchange for expanding the merchandise to Sears' nearly 900 stores, sources previously told the Tribune.
On Wednesday, Lampert said the contract gives him the right to roll out Martha Stewart in Sears, but the move wouldn't make sense because the contract has only four years to run.
"A lot changes in four years, but we would like to make sure there is continuity in what we do," he said.
Lampert also raised the possibility that Martha Stewart has become overexposed.
"You see her everywhere," he said. "I don't know how much time she spends on the product."
In response, Martha Stewart Living Omnimedia Inc. said, "We have a contract with Kmart through the end of the decade. We remain committed to working with them to deliver the distinctive products that Kmart customers have come to expect from us."
Sears shareholders took the breakdown in stride.
In fact, Sears Holdings' first annual meeting was a virtual lovefest, with shareholders praising Lampert for much of the nearly two hours he spent answering questions. It was a sharp contrast from last year's Sears, Roebuck and Co. meeting, when angry Sears shareholders vented their unhappiness with the Kmart deal, and security guards ended the 20-minute question period by flanking a shareholder who tried to fit in one more question.
This year's gathering at Sears' headquarters was sparsely attended, with dozens of chairs remaining empty. Many shareholders hailed from hedge funds and other investment firms and have held their Sears Holdings stock since Lampert, a hedge-fund operator himself, took the helm. Only a few dozen mom-and-pop shareholders were in attendance, the type that used to fill the seats at Sears' annual meetings.
The new unanimity was expressed in the in-favor vote totals on the four proposals up for shareholder approval: 99.07 percent; 96.64 percent; 98.05 percent and 99.36 percent.
Some of the old-timers turned out to be Lampert fans as well.
"You've turned the battleship around. Keep up the good work, captain," said one shareholder who said he had held Sears stock since 1970.
Another small shareholder was far less complimentary. She accused Lampert of conspiring with former Sears CEO Alan Lacy to hide the fact that the two were secretly discussing a potential merger in the summer of 2004 when Sears purchased 50 stores from Kmart at premium prices, which was revealed later in regulatory filings.
"Mr. Lampert was more than an influence in the mismanagement of Sears Roebuck from the time of his initial stock purchase in October 2000," said Carmen Liggett of Indianapolis. "It is my opinion that you were a ghost CEO directing Alan Lacy in his failed leadership."
Lampert declined to respond and took another question.