Oct. 16 (Bloomberg) -- Martha Stewart Living Omnimedia Inc. said it was unable to agree to terms with Sears Holdings Corp.’s Kmart that would have allowed their partnership to continue.

Martha Stewart, the New York-based company’s founder, told CNBC last month that Kmart let her line of home-goods products “deteriorate.” The partnership with Kmart ends in January.

“We wish our friends at Kmart and Sears Holdings all the best,” Stewart, 68, said today in a statement. “To the extent my recent comments were taken by anyone to be inconsistent with this sentiment that was not my intent.”

Sales from “Martha Stewart Everyday” products at Kmart totaled 43 percent of the company’s merchandising revenue and 10 percent of total revenue in 2008, according to an annual filing. Kmart’s contribution to Martha Stewart Living’s revenue decreased materially from 2007 to 2008 because of a decrease in annual minimum royalties due from Kmart, the filing said.

Chris Brathwaite, a spokesman for Sears Holdings, declined to comment on the statement.

“Martha Stewart Everyday Colors,” a line of interior latex paint, debuted at Kmart stores in May 1997. “Martha Stewart Everyday” bedding and bath products began selling at Kmart in September that year.

Martha Stewart Living fell 19 cents, or 3.1 percent, to $6 at 4:15 p.m. in New York Stock Exchange composite trading. The shares have more than doubled this year. Hoffman Estates, Illinois-based Sears Holdings, the biggest U.S. department-store company, declined $1.33 to $70.08 on the Nasdaq Stock Market.

To contact the reporter on this story: Allison Abell Schwartz in New York at aabell@bloomberg.net.

Last Updated: October 16, 2009 16:22 EDT