Macy's, Martha Stewart Living Settle JCP Contract Dispute

By Anna Rose Welch, Editorial & Community Director, Advancing RNA

While the lawsuit still continues between Macy’s and JCP, Macy’s and Martha Stewart Living plan to continue their partnership

The New Year has brought tidings of good cheer between Macy’s and Martha Stewart Living as their legal battle over JC Penney’s right to sell certain Martha Stewart products has come to an end. Details about the breach-of-contract case settlement were confidential, however, Macy’s and Martha Stewart said that the settlement was not material to either company and that they would be continuing their partnership.

Macy’s has also said that the end of this case would have no effect on its continuing suit against JCP.

The lawsuit began in 2012 after JCP announced its own partnership with Martha Stewart to sell home décor products. Under this deal, JCP would sell Martha Stewart kitchen, bed, and bath products in a store-within-a-store format — an effort undertaken by former CEO Ron Johnson to reinvent the department store. Macy’s did not condone this partnership on the grounds that JC Penney was selling Martha Stewart items that had been exclusive to Macy’s since their partnership began in 2006.  Macy’s demanded that certain items be removed from JCP stores and that it receive compensation for losses of profit from these products’ sales. In October, in a move that Macy’s lead counsel Theodore M. Grossman called “a complete surrender,” JCP and Martha Stewart revised their deal to eliminate the kitchen, bed, and bath products from JCP shelves, leaving the company the rights to sell only rugs, window treatments, and party supplies.

The end of this costly lawsuit stands to be particularly beneficial for Martha Stewart Living. The case surely added extra financial strain to the company, which was already struggling with the loss of advertising and publishing revenue in its third quarter, partially because of its reduced relationship with JCP. As analyst Michael Kupinski from Noble Financial Capital Markets says, “The Macy’s lawsuit was an overhang to the Martha Stewart shares; the resolution now allows the company to focus on its reorganization in its publishing division, a key catalyst toward higher stock valuations.” Not to mention, the end of this lawsuit will enable business to continue moving forward. As the companies said after the settlement, they are both looking forward to “a continued, successful partnership together.”

Some observations about committing to a celebrity endorsement, through the good times — and the bad.

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