Martha Stewart says Kmart once paid her $65 million a year in royalties—enough to bankroll her entire empire | Fortune

Stewart, 85, said on MasterClass’s Other People’s Business podcast that her licensing partnership with the discount chain once brought in as much as $65 million a year in royalties.

“Kmart was my first big money, and it was a lot of money,” she said. “I was clearing $65 million a year in royalties.”

That income, she said, was “funding the whole development of my magazine, the whole business.” It also helped set up the moment in 1999 when Martha Stewart Living Omnimedia went public and made her America’s first female self-made billionaire.

A discount-store deal that sold billions

Kmart first hired 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.

In fashion and media circles, a tie-up with a mass-market discounter looked like a step down for a woman whose brand was built on East Hampton taste. Stewart saw distribution. This was before Amazon, and Kmart operated roughly 2,200 stores by 2000. She called it “the biggest retailer in America at the time.” Walmart had actually overtaken Kmart in sales around 1990, but Kmart still put her products in front of millions of shoppers every week.

The partnership outlasted her legal troubles and Kmart’s own 2002 bankruptcy. As late as 2008, the Kmart line accounted for 43% of her company’s merchandising revenue. It ended in January 2010, after Kmart’s parent, Sears Holdings, declined to renew. Stewart moved on to deals with Macy’s and Home Depot.

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.”