Will She Be In Or Out?

Can Martha Stewart still command the attention of Kmart shoppers? That's what Kmart CEO Jim Adamson is trying to figure out as the bankrupt retailer prepares to unveil a critically important new line of Martha Stewart holiday wares. Normally, Martha pitches her products in commercials for Kmart. But Adamson is so worried about how tarnished Martha is by the ImClone insider-trading affair, he told NEWSWEEK, he commissioned two versions of the commercial introducing her holiday goods--one starring Martha and one without her. And he says he still hasn't decided which will air when Kmart first offers Martha's wreaths, ribbons and snow globes in early November. "It will be a very difficult decision and I'll make it at the last minute," Adamson told NEWSWEEK. "If I feel that Martha the personality will adversely affect Martha the product at Kmart, then that's what will drive my decision. I'll do what's best for Kmart."

Adamson has publicly backed Stewart since the Feds began investigating her ImClone stock sale. He says he still has "a great deal of respect for Martha." But with Kmart facing a make-it-or-break-it Christmas, Adamson needed a contingency plan. The domestic diva denies she did anything wrong by dumping her ImClone stock just before federal regulators rejected the company's cancer drug. But prosecutors are circling closer to Martha following last week's guilty pleas to securities fraud and bank fraud by her old pal Sam Waksal, ImClone's ex-CEO. What will Adamson do if Martha's indicted? "Then we'd definitely go with the other commercial," he says. A winter wonderland is no place for a perp walk.