BusinessBusinessVideobusiness news

Macy's CEO Terry Lundgren 'Shocked And Blown Away' Over Martha Stewart's Alliance With J.C. Penney

Macy's CEO Explains Why He Hung Up On Martha Stewart
Reuters
Open Image Modal
Martha Stewart appears backstage at "12-12-12" The Concert for Sandy Relief, on Wednesday, Dec. 12, 2012 in New York. (Photo by Evan Agostini/Invision/AP Images)

NEW YORK (Reuters) - Macy's Inc

Lundgren, testifying on Monday in the trial of two Macy's lawsuits over the alliance, said Stewart told him of the deal the night before J.C. Penney announced it. He said he was so appalled he hung up on her.

"I was completely shocked and blown away," Lundgren said. "I was literally sick to my stomach."

J.C. Penney announced on December 7, 2011, that it would launch Martha Stewart boutiques in about 700 of its department stores in 2013. It also bought 17 percent of her company, Martha Stewart Living Omnimedia

Macy's, which has its own deal with Martha Stewart, sued her company in January 2012 for breach of contract, and later sued J.C. Penney as well. Macy's says it has the exclusive right to sell Martha Stewart products in certain product categories, including cookware and bedding.

The two cases were consolidated for a non-jury trial before Justice Jeffrey Oing in New York state court in Manhattan.

Lundgren, 60, said Stewart sounded like she was reading from a document prepared by lawyers when they spoke, and that he cut off the conversation when the home goods doyenne claimed her deal with J.C. Penney would be good for Macy's.

"I think that's when I hung up," said Lundgren. "The thought this was going to be good for Macy's was so far from anything I could comprehend."

Lundgren said that at the time he considered Stewart a friend, and he has not spoken to her since.

Macy's is still committed to the business relationship it developed with Martha Stewart Living Omnimedia, however. The Martha Stewart brand at Macy's grew 8 percent last year, growth that is twice that of Macy's as a whole, Lundgren said.

"This is an extremely important brand and we are going to continue to highlight the brand in our stores," Lundgren testified.

Macy's built Martha Stewart into its No. 1 home brand after Stewart came out of prison in 2005 after serving time for lying about a stock sale.

J.C. Penney CEO Ron Johnson is scheduled to take the stand on Friday. Martha Stewart also is expected to testify, but it is unclear when.

Martha Stewart shops in J.C. Penney stores, set to open in May, are the centerpiece of an improved home goods section that Johnson has called crucial to returning Penney to growth.

The cases are Macy's Inc. v Martha Stewart Living Omnimedia Inc., 650297/2012, and Macy's Inc. v J.C. Penney Corp., 652861/2012, New York State Supreme Court, New York County.

(Reporting by Karen Freifeld; editing by John Wallace)

Support HuffPost

At HuffPost, we believe that everyone needs high-quality journalism, but we understand that not everyone can afford to pay for expensive news subscriptions. That is why we are committed to providing deeply reported, carefully fact-checked news that is freely accessible to everyone.

Whether you come to HuffPost for updates on the 2024 presidential race, hard-hitting investigations into critical issues facing our country today, or trending stories that make you laugh, we appreciate you. The truth is, news costs money to produce, and we are proud that we have never put our stories behind an expensive paywall.

Would you join us to help keep our stories free for all? Your will go a long way.

Support HuffPost

Before You Go

Hottest Retailers
10. Overstock.com(01 of10)
Open Image Modal
Sales growth in '10 vs. '09: 23.8 percentRetail sales in the U.S.: $1.07 billionNumber of stores in 2010: N.A.Stores growth in '10 vs. '09: N.A.This year, the online retailer started selling discounted hotel rooms, and is considering offering deals on auto and home insurance.Read more at bundle.com.
9. H&M(02 of10)
Open Image Modal
Sales growth in '10 vs. '09: 29.3 percentRetail sales in the U.S.: $1.2 billionNumber of stores in 2010: 208Stores growth in '10 vs. '09: 10.1 percentAlthough only 10 percent of its worldwide stores are located in the U.S., the clothing retailer is rapidly growing. H&M; plans to have a running website to sell to American shoppers by the end of this year. Well-regarded designers like Donatella Versace also sell affordable collections at the store during certain seasons.Read more at bundle.com.
8. Netflix(03 of10)
Open Image Modal
Sales growth in '10 vs. '09: 29.5 percentRetail sales in the U.S.: $2.1 billionNumber of stores in 2010: N.A.Stores growth in '10 vs. '09: N.A.Despite price increases for subscribers, Netflix has presented itself as the far superior option to renting DVDs by mail or watching streaming content online (and people are talking with their wallets, here).Read more at bundle.com.
7. Apple Stores/iTunes(04 of10)
Open Image Modal
Sales growth in '10 vs. '09: 32.3 percentRetail sales in the U.S.: $18 billionNumber of stores in 2010: 233Stores growth in '10 vs. '09: 7.4 percentThink about which products have excited consumers in the past few years, and you will think of Apple: the iPhone, the iPad, and the soon to be debuted the iCloud. The typical Apple store also generates $4,046 of revenue per square feet, compared to $880 that Best Buy brings in.Read more at bundle.com.
6. Bodega Latina(05 of10)
Open Image Modal
Sales growth in '10 vs. '09: 32.5 percentRetail sales in the U.S.: $722 millionNumber of stores in 2010: 34Stores growth in '10 vs. '09: 61.9 percentThe rapidly growing Latino market has boosted sales for the grocery chain, which has seen the the most growth in areas like Southern California, Texas, and South Florida.Read more at bundle.com.
5. Tops Friendly Markets(06 of10)
Open Image Modal
Sales growth in '10 vs. '09: 33.1 percentRetail sales in the U.S.: $2.2 billionNumber of stores in 2010: 133Stores growth in '10 vs. '09: 77.3 percentAfter being downsized in the early 2000s, Tops Friendly Markets recently won a bankruptcy court battle to take over 79 supermarkets, and is making waves in the convenience store business. This summer, Top opened a remodeled store and an on-site fueling station in upstate New York.Read more at bundle.com.
4. hhgregg(07 of10)
Open Image Modal
Sales growth in '10 vs. '09: 36.3 percentRetail sales in the U.S.: $2.1 billionNumber of stores in 2010: 173Stores growth in '10 vs. '09: 32.1 percentThe consonant-heavy sounding store name founded by Henry Harold and Fansy Gregg opened its first 10 stores in South Florida with more planned. It passed $2 billion in sales for the first time last year.Read more at bundle.com.
3. Fresh & Easy Neighborhood Market(08 of10)
Open Image Modal
Sales growth in '10 vs. '09: 37.8 percentRetail sales in the U.S.: $766 millionNumber of stores in 2010: 164Stores growth in '10 vs. '09: 13.1 percentAlthough it initially lost money after opening its first store four years ago, Fresh & Easy is expanding in Southern California, Phoenix and Las Vegas, and just opened two stores in San Francisco.Read more at bundle.com.
2. Amazon.com(09 of10)
Open Image Modal
Sales growth in '10 vs. '09: 46.2 percentRetail sales in the U.S.: $18.5 billionNumber of stores in 2010: N.A.Stores growth in '10 vs. '09: N.A.Online bargains have always been available on Amazon.com and consumers have flocked to the retailer to find deals. In addition, Amazon saw major sales growth after it bought Zappos.com, a highly celebrated retailer known for its stellar customer service.Read more at bundle.com.
1. Ascena Retail Group (formerly Dress Barn)(10 of10)
Open Image Modal
Sales growth in '10 vs. '09: 58.9 percentRetail sales in the U.S.: $2.3 billionNumber of stores in 2010: 2,477Stores growth in '10 vs. '09: 58.9 percentWho would have thought Dress Barn would rank at the top of the 100 hottest retailers? The retail group has focused on targeting specific demographics to produce profits. The Ascena Retail Group's Dress Barn targets the 35- to 55-year-old woman. It's Maurices chain targets 17- to 34-year-olds, and another chain Justice's targets 7- to 14-year-old customers. Ascena has been able to target specific segments of the consumer base, and has seen real success.Read more at bundle.com.
Suggest a correction
|
Submit a tip