4:30pm Update: Yahoo reports Ron Johnson is OUT as CEO!
Here’s an update in the JC Penney / Martha Stewart / Macy’s lawsuit. As we’ve discussed before in the blog forus here, Macy’s and JC Penney are entangled in a lawsuit over the right to sell Martha Stewart-branded items.
Martha is already under contract by Macy’s. Macy’s has the exclusive right to sell Martha Stewart-branded home products. Meanwhile, JC Penney made a deal with Martha to sell Martha Stewart products at JC Penney too, in apparent violation of her existing agreement with Macy’s — entering into a $38.5 million deal with Martha without clearing up whether or not they could actually legally sell her stuff.
JC Penney has argued that carrying Martha Stewart’s products is essential to their company turnaround plan. Hearings resume today, and the New York Post has an update:
As its courtroom tussle over Martha Stewart resumes today, JCPenney is bracing for the worst. Accused by Macy’s of cutting an improper licensing deal with the domestic diva, CEO Ron Johnson’s company has begun scrambling this month to concoct a contingency plan should he lose the case, sources told The Post.
The worry: that Penney will be barred by a New York judge from selling an entire line of home goods designed by Stewart’s company, forcing Penney to eat massive losses on tons of inventory it has already produced.
“All of the stuff is already manufactured — it’s either on the water or in the warehouses,” according to a source close to Penney. “They’re feeling like there’s a substantial risk that they’re going to lose this and won’t be able to sell any of the merchandise.”
To avoid the danger of empty shelves, insiders said the retailer during the past two weeks has ramped up talks with Asian suppliers to arrange for emergency production of non-Stewart-designed bath products, bed linens and kitchenware. The emergency goods, which would take 75 to 90 days to manufacture and deliver, would likely be made under old Penney private labels, which include JCP Home for bedding and Cook’s for kitchenware, sources said.
Looking to sidestep the allegation that the Stewart-designed line violates Stewart’s home-goods licensing deal with Macy’s, Penney has kept Stewart’s name off most of the goods.
Apart from a handful of categories where Macy’s doesn’t have a license, such as window treatments, the merchandise slated to hit stores next month will bear the generic tag “JCP Everyday.”
Macy’s, however, has contended that its five-year-old agreement with Stewart bars her from designing any home goods for competitors, no matter what label is on them.
In reading this, I found it interesting that now JC Penney wants to keep the Martha Stewart brand name off her JC Penney line. If Martha’s name recognition is so essential to their turnaround plans, selling them under the JC Penney brand seems to defeat the purpose of bringing her in at all.
cg1 says
It just sounds like Penneys is trying to sell the stuff one way or another so they don’t have to destroy it and can get some return. Taking Martha’s name off of it seems like one way to do that but Macy’s says that won’t work either. Of course the idea was to have Martha’s name on the products.
I’m actually placing more of the blame on Martha here. She wasn’t happy with Macy’s handling of her products and seemed to have misled Penney’s on her obligation to Macy’s.
“Johnson said he learned of another way around the Macy’s deal on September 20, 2011, when Stewart and an MSLO executive told him the company’s outside counsel concluded the Macy’s contract allowed them to create a store within J.C. Penney. “That’s great news,” Johnson recalled saying.”
https://www.reuters.com/article/2013/03/02/us-macys-jcpenney-marthastewart-idUSBRE92011T20130302
TreeLover says
What’s up with Martha Stewart two-timing Macy’s? I think some of the blame falls on her here, for making a deal she couldn’t hold up with JCP. That being said, it’s about time Ron Johnson lost his job!