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Kmart and Martha Stewart Living Omnimedia have agreed to extend their distribution pact – which gives Kmart rights to sell Martha Stewart Everyday products, including some new still-to-be-developed categories - through 2009. Terms of the deal, which represents a two-year extension from the current pact, were not disclosed.

"We are delighted that Kmart will continue to be a foundation partner for MSO throughout the decade, and that our two companies have found mutually agreeable ways to improve upon our beneficial relationship," said Sharon Patrick, president and chief executive officer of the company that bears the name of the style doyenne, who was recently convicted of lying about a stock trade made using insider information.

As part of the deal, Kmart drops a pending lawsuit against Stewart, and both sides agreed to eliminate any minimum payment guarantees from their agreement.
KC's View:
While some analysts are applauding this deal because it demonstrates that Kmart management has a commitment to one of its biggest brands, you have to wonder about why a deal that didn’t expire until 2007 between two brands that are, at the very least, wounded, needed to be extended right now.

What happens if Stewart actually goes to prison and her brand hits the skids? Will this be a smart deal in 2008? Maybe. Maybe not.

Seems to us that Kmart ought to have more important things on its plate requiring immediate attention than cementing deals with a company bearing the name of a convicted felon.