Martha Stewart Takes the Stand in Macy’s Suit Against Deal with J.C. Penney

Michael Teague |

Martha Stewart took the stand in a New York State Supreme Court to defend the legality of her retail deal with J.C. Penney (JCP).

In a packed courtroom, Stewart’s 4-hour testimony followed that of the CEOs of both Macy's (M) and J.C. Penney.  The founder of Martha Stewart Living Omnimedia Inc. (MSO) claimed that her decision to sell kitchenware and bedding in J.C. Penney outlets was not in breach of her exclusive contract with Macy’s to sell similar products in their department stores.

Furthermore, she claimed that Macy’s was actually remiss on its side of the deal, alleging that the company had allowed her brand to hit a ceiling of about $300 million in sales.



For its part, Macy’s is suing to stop J.C Penney from opening Martha Stewart shops inside its stores, as had been previously done in its own department stores.  Additionally, it is trying to prevent Stewart from selling any products at J.C. Penney stores, irrespective of whether or not they would carry the Martha Stewart logo.

Meanwhile, Stewart and Penney are claiming a stipulation in MSO’s agreement with Macy’s that states that the only other place Stewart could sell her some of her Macy’s line is at Martha Stewart stores.  Stewart’s lawyer is claiming that the Macy’s agreement never mandates that the hypothetical Stewart stores have to be “stand-alone”, leaving both MSO and J.C. Penney free to move ahead with their deal.

The confrontation has been rather acrimonious, only JCP and Martha Stewart Living have suffered significantly in the markets: MSO closed today down another 2 percent, to $2.45 per-share, while J.C. Penney took somewhat of a nosedive, down 10.63 percent to $14.96 per-share.  Both companies have had significant and long-standing financial issues that have nothing to do with the Macy’s trial.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
BRLXF Boralex Inc. 17.25 0.00 0.00 0
M Macys Inc. 19.71 -0.18 -0.90 2,744,404 Trade
MSO Martha Stewart Living Omnimedia Inc. n/a n/a n/a 0 Trade
JCP J.C. Penney Company Inc. Holding Company 3.36 -0.04 -1.03 2,294,003 Trade

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