Kmart and Martha Stewart Living Omnimedia, Inc. Agree on Amended Terms of Long-term License Agreement

Contract Extended through 2009

Kmart Holding Corporation (NASDAQ: KMRT) and Martha Stewart Living Omnimedia, Inc. (MSO) announced today that the companies have reached an agreement that serves the best interests of both companies by extending and amending several terms in their long-term distribution contract for the Martha Stewart Everyday brand label. The revised agreement better aligns the two companies' mutual business interests by extending the Martha Stewart Everyday partnership two years, through 2009; expanding the scope to several new product categories including ready-to-assemble furniture; eliminating the product category minimum guarantee but not the aggregate minimum guarantee features of the contract; and making other adjustments that, taken as a whole, benefit both companies.

In conjunction with this amended agreement, Kmart also announced today that it will withdraw the lawsuit -- pertaining to the interpretation of contractual language in the original contract -- filed by Kmart against MSO IP Holdings Inc. in Bankruptcy Court in February 2004.

"We are pleased to have extended and deepened our relationship with Martha Stewart Living Omnimedia. Kmart is committed to providing the highest quality and value-driven products to our millions of loyal customers nationwide, and the Martha Stewart Everyday brand is a great example of this commitment," said Julian C. Day, President and CEO of Kmart. "MSO is an extremely valued brand partner and we look forward to continuing that relationship on terms that best benefit both companies."

"This is an exciting development," said Sharon Patrick, President and CEO of Martha Stewart Living Omnimedia, Inc. "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. Reaffirming this highly successful partnership is due in large part to our confidence in the strength and acumen of Kmart's new management team." Ms. Patrick added: "We know that Martha Stewart Everyday's new and existing product offerings will continue to deliver the perfect combination of inspiration, high-quality, style, and utility that our customers love and expect from us."

Kmart sells Martha Stewart Everyday Home, Garden, Holiday, Colors, Kitchen, Keeping and Decorating, Candles, Baby, and accessory product lines. All collections, with the exception of Martha Stewart Everyday Colors, are available exclusively at Kmart and online at kmart.com .

About Kmart Holding Corporation

Kmart Holding Corporation (NASDAQ: KMRT) and its subsidiaries (together, "Kmart") is a mass merchandising company that offers customers quality products through a portfolio of exclusive brands that include Thalia Sodi, Jaclyn Smith, Joe Boxer, Kathy Ireland, Martha Stewart Everyday, Route 66 and Sesame Street. Kmart operates more than 1,500 stores in 49 states and is one of the largest employers in the country with approximately 158,000 associates. For more information visit the Company's website at www.kmart.com .

Cautionary Statement Regarding Forward-Looking Information and Other Matters

Statements made by Kmart which address activities, events or developments that we expect or anticipate may occur in the future are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that reflect Kmart's current views with respect to current events and financial performance. Such forward-looking statements are based upon assumptions concerning future conditions that may ultimately prove to be inaccurate and involve risks, uncertainties and factors that could cause actual results to differ materially from any anticipated future results, express or implied, by such forward-looking statements. Factors that could cause actual results to differ materially from these forward-looking statements include, but are not limited to, factors relating to Kmart's internal operations and the external environment in which it operates; Kmart's ability to successfully implement business strategies and otherwise fund and execute planned changes in various aspects of the business marketplace; demand for the products of Kmart's key brand partners as well as the engagement of appropriate new brand partners; changes in consumer spending and Kmart's ability to anticipate buying patterns and implement appropriate inventory strategies; Kmart's ability to reverse its negative same-store sales trend; competitive pressures and other third party actions, including pressures from pricing and other promotional activities of competitors, as well as new competitive store openings; the resolution of allowed claims for which Kmart is obligated to pay cash under the Plan of Reorganization; Kmart's ability to properly monitor its inventory needs in order to timely acquire desired goods in appropriate quantities and/or fulfill labor needs at planned costs; Kmart's ability to attract and retain customers; Kmart's ability to maintain normal terms with vendors and service providers; Kmart's ability to maintain contracts, including leases, that are critical to its operations; Kmart's ability to develop a market niche; regulatory and legal developments; general economic conditions; weather conditions, including those which affect buying patterns of Kmart's customers; and other factors affecting business beyond Kmart's control; Kmart's ability to attract, motivate and/or retain key executives and associates; and other risks detailed in Kmart's Securities and Exchange Commission filings. Kmart undertakes no obligation to release publicly the results of any revisions to these forward-looking statements to reflect events or circumstances after the date such statements were made.

About Martha Stewart Living Omnimedia, Inc.

Martha Stewart Living Omnimedia, Inc. is a leading provider of original how-to information that turns dreamers into doers, inspiring and engaging consumers with unique content and high-quality products for the home. MSO's creative experts develop content within eight core areas -- Home, Cooking and Entertaining, Gardening, Crafts, Holiday, Keeping, Weddings, and Baby and Kids -- that provide consumers with ideas and products to celebrate their homes and the domestic arts. MSO is organized into four business segments: Publishing, Television, Merchandising, and Internet/Direct Commerce.

This press release contains certain "forward-looking statements," as that term is defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements are not historical facts and can be identified by the use of terminology such as "may," "will," "should," "could", "expects," "plans," and "intends." The Company's actual results may differ materially from those projected in these statements, and factors that could cause such differences include further adverse reaction to the prolonged and continued negative publicity relating to Martha Stewart by consumers, advertisers and business partners; a loss of the services, or diminution in the reputation, of Ms. Stewart; further adverse reaction by the Company's consumers, advertisers and business partners to the uncertainty relating to the nature of the resolution of the criminal and civil proceedings currently underway against Ms. Stewart concerning a sale of non-Company stock by Ms. Stewart and any adverse resolution of such proceedings; adverse resolution of some or all of the Company's ongoing litigation; any loss of the services of the Company's key personnel; downturns in national and/or local economies; shifts in our business strategies; a softening of the domestic advertising market; changes in consumer reading, purchasing and/or television viewing patterns; unanticipated increases in paper, postage or printing costs; operational or financial problems at any of our contractual business partners; the receptivity of consumers to our new product introductions; and changes in government regulations affecting the Company's industries. Certain of these and other factors are discussed in more detail in the Company's filings with the Securities and Exchange Commission, especially under the heading "Management's Discussion and Analysis", which may be accessed through the SEC's World Wide Web site at http://www.sec.gov/ . The Company is under no obligation to update any forward-looking statements after the date of this release.

SOURCE: Kmart Holding Corporation

CONTACT: Kmart Holding Corporation: Media Relations, +1-248-463-1021, or
Investor Relations, +1-248-463-1040; Martha Stewart Living Omnimedia, Inc.:
Investors, James Follo, Chief Financial Officer, +1-212-827-8218, or Media,
Elizabeth Estroff, Corporate Communications, +1-212-827-8281

Web site: http://www.kmart.com/








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