Martha Stewart to Open Exclusive Line for Macy’s

Martha Stewart Living Omnimedia Inc. said Thursday that it would extend its reach by launching an exclusive line of home products in Macy’s department stores. Shares of the lifestyle media company rose 13.7%.

The Martha Stewart Collection, which will include towels, dinnerware and holiday decor, is expected to debut in fall 2007 in Macy’s stores and on Macys.com.

Martha Stewart Living already sells home goods at Sears Holdings Corp.’s Kmart unit and Sears Canada Inc. The new line will be targeted to a more upscale, traditional Macy’s customer, according to a joint statement by Martha Stewart Living and Federated Department Stores Inc., Macy’s parent company.

“It gives Macy’s a very recognizable brand in a very important sector, the home business,” said Stuart Kessler, president of Clear Thinking Group, a New Jersey retail, consumer products and manufacturing consulting firm.

“As long as they can pull off the segmentation in the consumer’s mind, they’re going to have a winner on their hands,” Kessler said.

Kessler said Martha Stewart Living might have sought another venue for its products as Sears Holdings cuts costs and makes other changes to become more competitive. Sears Holdings was formed last year when Kmart acquired Sears, Roebuck & Co.

“It makes all the sense in the world to diversify if the opportunity presented itself because of the lack of clarity relative to Sears’ direction in the mid- and long term,” Kessler said.

Macy’s expects eventually to sell other Martha Stewart-branded products, possibly including cookbooks and new goods in categories such as outdoor entertainment. The first term of the agreement will extend for five years, the companies said.

Wendy Liebmann, president of consulting firm WSL Strategic Retail, said the new line would help Federated appeal to more customers as it converts stores it acquired from May Department Stores Co., parent of Robinsons-May, to the Macy’s nameplate.

“What Macy’s now, as more of a national brand department store, is trying to do is find ways to appeal to regional customers in ways that are more appropriate,” Liebmann said.

Also Thursday, Federated reported that March sales were flat at stores open at least a year, and it forecast a decline of as much as 3.5% this month.

Its shares rose 71 cents to $77.36. Martha Stewart Living gained $2.35 to $19.45.