J.C. Penney, MSLO Revise Agreement; Macy’s to Await Court’s Ruling

Martha Stewart

Martha Stewart

NEW YORK—J.C. Penney and Martha Stewart Living Omnimedia (MSLO) announced that they have cut a new agreement to reduce the number of product categories in J.C. Penney’s MarthaHome collection.

Meanwhile, Macy’s said it will wait for rulings on its lawsuits against MSLO and J.C. Penney from New York State Supreme Court Judge Jeffrey Oing. Macy’s filed suit against MSLO in January 2012, and then filed a separate suit against J.C. Penney in August 2012—with both suits alleging that the original JCP-MSLO agreement interfered with Macy’s own Martha Stewart program.

Rulings on the two cases could come later this week. According to press reports, Judge Oing gave J.C. Penney and MSLO until this Friday, Oct. 25, to resolve the issue and, if they couldn’t, he would rule on the cases.

The new agreement between J.C. Penney and MSLO trims down the range of product categories that will be offered in its MarthaHome collection to window treatments and hardware, lighting, rugs, holiday products and celebrations. The original agreement, announced in December 2011, called for a wider range of home furnishings, along with a dedicated in-store shop concept and an e-commerce website that would offer the products and educational tips.

As part of the new deal, MSLO will receive design fees, guaranteed minimum royalties and the 11 million shares of MSLO stock that J.C. Penney currently owns. In addition, J.C. Penney will no longer have representation on the MSLO board.

Myron Ullman III, CEO of J.C. Penney, said, “We are happy to be moving forward and continuing to provide our customers with quality products from the MarthaHome collection, which includes MarthaWindow, one of our best-selling lines of window treatments.”

In its statement, Macy’s said the new agreement “is a tacit admission by both Penney and MSLO that Macy’s is the only store that can sell Martha Stewart bed, bath and kitchen goods, and that the contract that Penney and MSLO entered into to sell Martha Stewart bed, bath, and kitchen goods at Penney was illegal. Macy’s claims for the substantial damages it suffered as a result of Penney’s interference with Macy’s contract and MSLO’s breach remains before the court.”