NEW YORK – J.C. Penney Co. is scaling back its partnership with Martha Stewart ahead of a ruling in its long-running fight with Macy’s over Martha Stewart products.
The department store chain will no longer sell a broad range of home and bath products designed by Martha Stewart Living Omnimedia Inc., the two companies said Monday. Penney will continue to sell a smaller batch of Martha Stewart items, including window treatments, rugs and party supplies.
Penney will also be returning the media and merchandising company the 11 million shares it bought as part of the 2011 licensing deal and giving up two seats on Martha Stewart’s board.
Plano, Texas-based Penney and Martha Stewart, which is based in New York, signed a merchandising deal in December 2011. That prompted Macy’s Inc. to sue both companies for violating its exclusive agreement with Martha Stewart.
New York State Supreme Court Judge Jeffrey Oing had imposed a Friday deadline for the parties to resolve a fight over whether Macy’s has an exclusive right to sell some Martha Stewart products, whether they carry the Martha Stewart moniker or not. Otherwise, the judge would make his own ruling. The agreement between Penney and Martha Stewart takes the big issue off the table. Still to be resolved is how much Penney must pay Macy’s in damages and legal fees.
The trial, which began in February and continued in fits and starts, was hardly a vanilla contract case. It featured testimony from Macy’s CEO Terry Lundgren, former Penney CEO Ron Johnson and Martha Stewart herself. Johnson, who orchestrated the deal with Martha Stewart, appeared on the stand just a month before he was fired as Penney CEO.
Martha Stewart said Monday that the company revised the contract’s terms in a “cordial way” to “eliminate the bones of contention in the lawsuit.”
“We cleared up the issue. I hope this helps in the resolution of the lawsuit,” she added.
The revised agreement is the latest way Penney’s returning CEO Mike Ullman is unraveling the botched bid by Johnson to transform the retailer. Johnson’s changes led to disastrous results and caused its shares to plummet. Ullman retook the helm at Penney in April when Johnson was fired.
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