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Martha and Macy's: A Good Marriage?

Martha Stewart may be moving uptown—to Macy’s from Kmart, according to reliable sources. An announcement from Macy’s owner Federated Department Stores could come as early as this afternoon.

Can Martha make the leap from Kmart, where her curtains and bedspreads and knickknacks have long been sold? To some observers, the trip uptown seems like a good idea for both Macy’s and the rehabilitated Ms. Stewart. “It would be a very good marriage,” says George Whalin, president of Retail Management Consultants. Martha Stewart gets to move up to a higher class of merchandising and an expanding national platform, while Macy’s gets a proven brand. “Martha is magic.”

The magic has clearly gone out of the marriage with Kmart. Edward Lampert, the hedge fund manager who engineered the merger of Kmart and Sears last year, asked the household diva to accept less money while expanding her Kmart license to include Sears stores, the Chicago Tribune has reported.

Martha Stewart would likely upgrade her products for Macy’s to appeal to a more upscale audience, and, in so doing, upgrade her image as well. None of the companies involved in the possible deal would comment.

Kmart, on the other hand, would lose a much-need profitable brand.

Analysts are wondering why Lampert wouldn’t fight harder to keep Martha in the Sears fold at a time when his attempts to straighten out the long-suffering Sears and Kmart chains have gained little traction. Analysts and competitors say it’s hard to discern Lampert’s strategy for the long-suffering chains.

Recently, for example Sears Holdings announced a prototype new store, Essentials, that would be located in shuttered Kmarts and showcase a mix of products from both chains. But in March, Sears said it was canning the Essentials concept and combining it with the Sears Grand group of stores, an off-mall concept that predates the merger.

What does that portend? No great merchandising breakthroughs, says Jeff Green of Jeff Green Partners, a retail consultant. His assessment? “He probably wants to keep it going as Sears for awhile before selling off some properties.”

-- Beth Karlin

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