Kmart Unveils Martha Stewart Kitchenware Line

N E W  Y O R K, Oct. 4, 2000 -- Kmart Corp., the No. 2 retailer in housewares,wants to unseat Wal-Mart’s leading position in the category, andit’s counting on the doyenne of domesticity, Martha Stewart, tomake it happen.

Kmart, which already carries Stewart’s towels, sheets andgardening accessories, will be officially selling her new 650-stylehousewares collection on Friday. The lineup, which ranges frompopover pans to stainless steel spatulas, will be priced anywherefrom 30 to 50 percent lower than its competitors. They will be soldexclusively in Kmart’s 2,100 stores and its Bluelight.com Web site.

“I am very confident that over the next three to four quarters,we will be the number one retailer in housewares,” said ChuckConaway, Kmart’s chairman and chief executive officer, who sharedthe spotlight with Stewart at a presentation Tuesday at JeanGeorges Restaurant. Her brand is the retailer’s top-selling label.

Martha Stewart, the AssetKmart does about $700 million in annual housewares sales, andConaway believes the category could top $1 billion over the nextcouple of quarters, with the addition of the Martha Stewarthousewares collection.

Mandana Hormozi, an analyst at Lazard Freres, estimatesStewart’s line could reach $350 million to $400 million within thenext couple of years.

Wal-Mart currently does a little more than $1 billion in salesin the category, according to analysts.

Already, the Martha Stewart kitchenware line has rung up $2million in sales in its first 11 days of selling, according toSteve Ryan, Kmart’s vice president, general merchandising managerof home products division. That’s without any TV or printadvertising, slated to be launched Oct. 15. The collection willalso be sold on Kmart’s Bluelight.com Web site within the nextcouple of weeks.

Retailer Isn’t ConcernedBut Wal-Mart, doesn’t appear to be ready to declare the battle over.

“We are confident that we will continue to remain in ourposition,” Tom Williams, company spokesman. “We welcome thecompetition.”

Analysts, citing the combination of high quality and low pricesof Stewart’s new knives and dinnerware, said Wal-Mart isn’t theonly one that could be affected by Stewart’s new entry.Williams-Sonoma Inc. and Crate & Barrel could also be vulnerable,they said. Williams-Sonoma, in fact, is launching a less expensivehousewares line called Elm Street, to be in stores for 2002.

Universal AppealThe Martha Stewart housewares line appeals to both the loyalKmart shopper, and the upscale consumer, who wants to furnish herthird home inexpensively, analysts said. For example, an enamelcast iron pot sells for $59 compared with $159 for a competingbrand; a 20-piece china place setting for $29.99 compared with acompetitor’s $84.95; and a seven-piece cutlery set for $59.99compared with $180.99 elsewhere.

“This could make an impact on a lot of different retailers — ifKmart is successful with the execution,” Wendy Barnard, seniorvice president of the Barnard Retail Trend Report, referring to theretailer’s past operational problems.

The availability of the line on Bluelight.com should also helpwiden its consumer appeal, attracting a customer who “might nevershop at Kmart,” said Shelly J. Hale, an analyst at Banc of AmericaSecurities.

Stewart, whose total business at Kmart is expected to generatemore than $1 billion for the fiscal year, ending Jan. 31, concededthat the retailer’s woes had been “a problem.” However, shepointed out that Conaway’s arrival four months ago has improved thesituation.

“It’s been kind of on a roller coaster ride, and we are chuggingup that track,” Stewart added.