Source: Fortune
Summary
Marttha Stewart earned up to $65 million a year in royalties from her licensing deal with Kmart in the 1990s, which helped fund her magazine and business. The partnership, which began in 1987, included a line of home goods that peaked at $2 billion in annual sales. Stewart said the deal was crucial to her rise as America’s first self-made female billionaire. The arrangement lasted until 2010, when Kmart’s parent company declined to renew. Stewart later faced legal issues that cost her an estimated $1 billion.
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The numbers tell one story.
Marttha Stewart made $65 million a year from Kmart in the 90s.
The deal funded her magazine and helped her become a billionaire.
It lasted until 2010, when Kmart’s parent company ended it.
Her legal troubles later cost her about a billion dollars.
Author: Evan Null
A discount-store deal that sold billions
Kmart first hired Martha Stewart in 1987 as a lifestyle consultant and spokesperson for its home division. That arrangement fizzled in the early 1990s. Stewart complained about the chain’s merchandising and quality control, and Kmart was drifting toward financial trouble. After Floyd Hall became CEO in 1995 and set out to turn the retailer around, Kmart came back to her.
In 1997, the company launched Martha Stewart Everyday, a line of sheets, towels, shower curtains, and other bed-and-bath goods sold only at Kmart. It later spread well beyond the linen aisle.
“They wanted me to be an influencer,” Stewart said. “They didn’t know that word, but I knew that I could really influence a huge [audience].” Fortune has called her the original influencer.
The terms were generous. “They signed this very fabulous deal with a huge royalty that I would get on every sale of every product that I designed,” she said. Kmart also paid for the advertising, starting with a first-year budget of about $20 million that went largely to TV commercials.
“In the first year, we sold hundreds of millions of dollars of product,” Stewart said. “They took a chance.” At its peak, she said, the line was selling close to $2 billion worth of merchandise a year.
How a stock sale cost her about $1 billion
Her fortune took its biggest hit from a much smaller transaction. In December 2001, Stewart sold her shares of ImClone Systems a day before the FDA’s rejection of the company’s cancer drug became public. The sale avoided a loss of roughly $45,000.
Prosecutors never convicted her of insider trading. In 2004, a jury found her guilty of conspiracy, obstruction, and lying to federal investigators about the sale. She served five months at a federal prison camp in Alderson, W.Va., from October 2004 to March 2005, followed by five months of home confinement. She later said Orange Is the New Black wasn’t as good as real prison.
Stewart says the ordeal cost her “about a billion dollars.”
“The lawyers took me to the cleaners and they were horrible,” she said.
Her company took a hit too, because its brand was Stewart herself. Shares sank during the scandal, and the business never fully recovered. In 2015, Sequential Brands Group agreed to buy Martha Stewart Living Omnimedia for about $353 million, a near-clearance price next to its peak valuation. The deal took the company off the New York Stock Exchange.
The comeback, with an assist from Snoop Dogg
Stewart’s second act has leaned on a partnership few would have predicted. Snoop Dogg appeared on The Martha Stewart Show in 2008. Eight years later, the two were co-hosting a cooking show on VH1, Martha & Snoop’s Potluck Dinner Party.
“You know the real result of that friendship? Demographics,” Stewart said. “That quadrupled my audience and quadrupled his audience.” She has also said Snoop taught her how to negotiate.
Still adding businesses at 85
Stewart hasn’t slowed down. Her Emmy-nominated series Martha Cooks arrived on Netflix on Aug. 25, and full video episodes of The Martha Stewart Podcast followed a day later, part of Netflix’s video podcast partnership with iHeartMedia. That’s a friendlier relationship with the streamer than she had with the 2024 documentary about her life, which she said she hated.
Last year she launched a skincare brand, declaring that retirement “is not an option.” In May, she unveiled an AI startup that aims to manage your home before things break.
“But I’m back,” Stewart said on the podcast. “I mean, I’m pretty good.”
