In a win-win-lose move, Martha Stewart Living Omnimedia (NYSE:MSO) announced that it would be introducing an exclusive line of upscale wares at Federated's (NYSE:FD) Macy's chain next year.
It's a win for Martha Stewart: She buffs up her high-end brand and gains shelf space at one of the most popular department store chains. It's also a win for Federated: It's able to market a marquee name to its well-heeled clientele, with products they'll only be able to find at Macy's.
The loser? Kmart. The Sears Holdings (NASDAQ:SHLD) subsidiary is the lone retailer carrying Stewart-branded housewares at the moment. Kmart has tried to spruce up its image over the years by hooking up with classy celebrities like Stewart, Jaclyn Smith, and Kathy Ireland, but it hasn't worked. Failing to connect with the same "cheap chic" panache as rival discounter Target (NYSE:TGT), Kmart has been closing stores over the past few years. Therefore, Martha's move to go upmarket, by signing a deal that will roll out the Martha Stewart Collection at Macy's and macys.com in fall 2007, is just good business.
No matter how you feel about Martha, you have to admit that she still commands a sizeable audience through her empire, which spans several magazines, a television deal with General Electric's (NYSE:GE) NBC, and audio programming through Sirius Satellite Radio (NASDAQ:SIRI). When you have a company that bears your name and a larger-than-life persona, image is everything. Associating Martha's brand with upscale Macy's, rather than struggling Kmart, should serve Martha Stewart shareholders well.
Then again, the fall of 2007 is still a year and a half away. Who knows how finicky tastes will turn between now and then? Shares of Stewart's company were singled out by David Gardner back in November of 2002 for Motley Fool Stock Advisor newsletter subscribers. With legal trouble mounting for Martha, David took advantage of a 55% spike in the share price to recommend the sale eight months later. He may have clocked out too soon, but you won't find too many investors complaining of a 55% gain over a matter of months.
So let's see whether Martha's image improves under Macy's watch. Just, please, don't force us to witness a giant Martha Stewart balloon floating down Broadway during next year's Macy's Thanksgiving Day Parade.
Longtime Fool contributor Rick Munarriz feels that Martha's time behind bars may actually have helped prolong her iconic presence. He does not own shares in any of the companies mentioned in this story. The Fool has a disclosure policy. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.
