Target Says Kmart is Cooperating

MINNEAPOLIS — Kmart Corp. has agreed to “permanently” remove price-comparison ads from all Kmart stores following a lawsuit filed by Target Corp., but a Target spokesman said the company still plans to pursue litigation accusing Kmart of false advertising.

Last week Target (TGT) filed a lawsuit in Minneapolis federal court alleging that Kmart’s advertising misstated prices on hundreds of items at Target’s discount stores.

A Target spokesman said Friday that Kmart (KM) agreed to a court stipulation to permanently remove all “Dare to Compare” signs from stores. He added that Target has “totally achieved” its principal goals against Kmart, but would still continue with the lawsuit for now. The spokesman wouldn’t specify what issues still require resolution.

A Kmart representative told Dow Jones Newswires the company plans to issue a statement on the Target lawsuit shortly.

“False advertising hurts everyone and undermines consumer confidence,” said James T. Hale, Target’s executive vice president and general counsel, in a prepared statement. “We are pleased that Kmart’s deceptive advertising campaign has stopped, but the real winner is the consumer.”

The legal spat centered on a marketing campaign Kmart launched earlier this year. On everything from Crock-Pots and light bulbs to Fruity Pebbles cereal, Kmart has been placing “Dare to Compare” signs that claimed its prices undercut those of Target or other rivals.

Target, Minneapolis, hired a market-research firm to audit Kmart’s signs, and the firm reported that of the 622 displays it surveyed, 74% mentioning Target had at least one error. Nearly 30% of the items weren’t carried at the nearest Target store.

At the time, Kmart, Troy, Mich., defended its advertising campaign and said the suit showed that Target was getting nervous. Kmart has trimmed prices on thousands of items, mostly food and household products.

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