Martha Stewart has built a reputation for never doing anything halfway. And that includes biting the hand that used to feed her.

In an interview on CNBC Wednesday morning to talk about her new deal with Home Depot Inc. (HD), she had a few not-so-good things to say about Kmart, its parent company and its chairman, Edward Lampert.

Stewart said the close of her relationship with Kmart at the end of this year couldn't come soon enough. She blamed the parent company of Kmart, Sears Holdings (SHLD), for letting her Martha Stewart Everyday line deteriorate in recent years.

"It has been kind of ripped off. I would say it has been diminished. The quality is not what I am proud of," she said.

Then she ripped into the stores themselves. "Have you been in a Kmart lately? It is not the nicest place to shop," said Stewart. She said she had great hopes when financier Edward Lampert took Kmart over in 2003, but they were dashed.

But there seems to be no love for Martha back at Sears headquarters. In a statement, Sears Holdings' management expressed surprise at her comments about the quality of the merchandise.

"Given that the product is designed by Martha Stewart Living Omnimedia, manufactured to their specifications and subject to approval by the Martha Stewart team, we think that Ms. Stewart should accept responsibility for her product," said the statement.

A Kmart spokeswoman said the company has made strides in adding new product lines and more items and has improved the quality of merchandise, in addition to adding features to improve the shopping experience. She would not disclose sales figures, but said Kmart is pleased with the response it has gotten to its new products.

But it may have been more a question of dollars than personal taste that ended the deal. Sears Holdings has said before it couldn't come to terms with Stewart, and she was coy about the subject while on the air. Kmart has shrunk since it emerged from bankruptcy in 2003 and merged with Sears in 2004 and that has reduced the number of stores carrying Stewart's line -- and the sales base for her royalty payments.

Stewart can afford to turn up her nose at Kmart now that she has a deal with the more upscale Macy's chain to sell her line of soft goods -- linens and housewares that overlap the product lines she sold at Kmart. She has appeared in Macy's ads touting her line, the way she used to do for Kmart.

Stewart was a long way from being today's multimedia domestic goddess when she signed on as Kmart spokeswoman in 1987, or even in 1997, when she launched Martha Stewart Living Everyday. By her own admission, at its peak in 2002, the line sold $1.6 billion worth of products at Kmart stores.

Her latest contract was extended in 2004, a lifeline for her company, Martha Stewart Living Omnimedia (MSO), when it was in chaos following her conviction on charges of lying to federal investigators. But it was not a happy partnership -- Kmart sued Omnimedia in 2004 over payments tied to meeting certain sales levels -- and it soured further in 2005 when she signed the deal with Macy's Inc. (M).

Lampert said at the time he wanted to expand Martha Stewart Everyday to Sears stores, but couldn't agree on terms. He told the company's 2005 annual meeting that "maybe they don't like us anymore." After today, there is no "maybe."



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