January 24, 2012, 4:36 PM

Macy’s sues Martha Stewart over a deal with J.C. Penney

Macy’s wants to block Stewart’s recent 10-year licensing deal with J.C. Penney.

Allison Enright

Editor

Lead Photo

Macy’s Inc. has sued Martha Stewart Living Omnimedia Inc. over an agreement it signed last year with J.C. Penney Co. Inc. that includes store and web sales.

The dispute involves J.C. Penney’s purchase, announced in December, of a 16.6% stake in Martha Stewart Living, the lifestyle content, media and merchandising company founded by the TV and magazine personality. The 10-year deal calls for J.C. Penney, No. 20 in the Internet Retailer Top 500 Guide, to create Martha Stewart-themed shops within its stores and to jointly launch by 2013 a related e-commerce site.

Macy’s Inc., however, has sold Stewart-branded merchandise in its department stores and online since 2006. In a lawsuit filed yesterday, that retail chain, No. 17 in Internet Retailer’s Top 500 Guide, asks a New York state court to block the deal with J.C. Penney. Macy’s says the deal violates terms mapped out in Macy’s agreement with Martha Stewart Living that grants Macy’s exclusive rights to sell Stewart-branded products in the cookware, kitchen, bed and bath categories, says a spokesman for Macy’s.

Macy’s says it will not pull back its support of the Martha Stewart Living line in stores or online. Indeed, the retailer yesterday renewed its agreement to sell Martha Stewart Living merchandise in the highlighted categories exclusively at Macy’s and Macys.com through January 2018. “Macy's plans to fully support its exclusive Martha Stewart-branded product going forward,” the chain’s spokesman says.

E-commerce has become increasingly important to J.C. Penney’s long-term growth plans. Last year, it closed a handful of stores and said it will wind down its catalog business and invest some of those cost savings in e-commerce. It also launched Cladmen.com, a men’s apparel e-commerce site, with Esquire magazine. 

Penney’s agreement with Martha Stewart Living was its first major merchandising move under the leadership of CEO Ron Johnson, who took over Nov. 1 after leading Apple Inc.’s retail store network. He has said he intends to transform J.C. Penny “into America’s favorite store.” He promises to reveal more on how he intends to accomplish that during a previously announced J.C. Penney press event tomorrow.

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