Martha Stewart loses bid to dismiss Macy’s contract claim

NEW YORK, Fri Apr 12, 2013 — Martha Stewart’s company lost a bid on Thursday to dismiss Macy’s Inc.’s claim that it violated their contract when it designed certain products for J.C. Penney Co. Inc., even if the products do not carry the Martha Stewart brand.

New York State Supreme Court Justice Jeffrey Oing’s ruling may affect whether J.C. Penney can sell Martha Stewart-designed home goods in bedding, bath and cookware under a “JCP Everyday” label.

The judge is expected to rule Friday on whether to temporarily block Penney from selling Martha Stewart-designed goods that Penney manufactured in that “Everyday” packaging.

A preliminary injunction already in place bars J.C. Penney from selling Martha Stewart brand products in certain categories.

A Citi analyst on Tuesday estimated the inventory already in a warehouse could be worth $100 million.

Oing also pushed again for the sides to settle, rather than leaving the matter in his hands.

“This is a business deal that you should not have courts getting involved in,” Oing said. “It’s getting to a point where the clock can’t be turned back. The ship is ready to sail.”

Macy’s sued J.C. Penney and Martha Stewart Living Omnimedia Inc. (MSO.N) after the two companies announced plans in December 2011 to open “Martha Stewart” stores within J.C. Penney.

 

The plans were part of Ron Johnson’s attempt to re-invent J.C. Penney after he became chief executive in November 2011. Johnson, who came under fire after sales fell 25 percent at the department store last year, was ousted on Monday.

Macy’s, J.C. Penney set to resume trial over Martha Stewart

NEW YORK, Mon Apr 8, 2013 — Macy’s Inc. and rival J.C. Penney Co. Inc. are due back in court Monday in their battle over Martha Stewart home goods after a month-long mediation effort appeared to have failed.

The trial is set to resume in New York state court over whether Macy’s has an exclusive right to sell certain Martha Stewart products.

The legal battle has hampered a key part of turnaround plans for J.C. Penney, which opened the first of its in-store boutiques on Friday with only some of the Martha Stewart goods it had originally planned.

Justice Jeffrey Oing last month ordered Macy’s, J.C. Penney and Martha Stewart Living Omnimedia Inc. into mediation in the hopes of resolving the dispute while the non-jury trial was in recess because of scheduling conflicts.

But, as of Friday, no deal had been struck and witnesses were scheduled to testify on Monday and Tuesday, according to a person familiar with the case.

Among the witnesses are J.C. Penney marketing executives, according to the person, who wasn’t authorized to speak publicly and did not want to be identified.

J.C. Penney buys stake in Martha Stewart Living

PLANO, Texas ― Department store chain J.C. Penney Co. Inc. bought a 16.6 percent stake in Martha Stewart Living Omnimedia Inc. in a $38.5 million deal that will see it introduce the brand in its stores starting February 2013.

Martha Stewart shares rose as much as 37 percent to $4.26 in premarket trade on Wednesday.

J.C. Penney will pay $3.50 a share for the stake, a 12 percent premium to Martha Stewart Living’s closing price on Tuesday and will get two seats on the board.

Under a 10-year partnership, J.C. Penney will introduce ministores for the Martha Stewart Living brand and jointly develop an e-commerce site, expected to launch in 2013.

The arrangement is expected to fetch Martha Stewart Living, a diversified media and merchandising company, more than $200 million, including royalty payments, design fees and advertising commitments over the contract period.

Martha Stewart Living also said it will pay its shareholders a special dividend of 25 cents a share.

In May, Martha Stewart Living hired Blackstone Group to explore opportunities to sell or find a partner after several years of sales declines in its magazine publishing, television and merchandising businesses. Between 2007 and 2010, revenue fell by more than a quarter.

Martha Stewart Living hires Blackstone advisers; shares soar

NEW YORK ― Martha Stewart Living Omnimedia has hired Blackstone Advisory Partners, signaling it could strike a partnership or sell a stake in the company and sending shares up more than 30 percent.

At the same time, the company’s founder, Martha Stewart, announced Wednesday that she expected to rejoin the board of directors in the third quarter.

The company, known for its flagship magazine and brands, said it hired Blackstone after having been approached by other parties interested in becoming a partner or investing in it.

But it cautioned, “there is no assurance that the exploration of strategic partnerships and other opportunities will result in a partnership or transaction.”

A source familiar with the situation said there has not been an offer made for the entire company. The source added that while founder and controlling stockholder Stewart would prefer a transaction other than an outright sale, she will consider all options.

The company’s shares were up 31.3 percent at $4.95 in late morning trading on the New York Stock Exchange.

Once a company whose stock traded around $30 a share, Martha Stewart Living has struggled to draw advertising dollars, turned over top management and laid off staff over the last several years. The company currently has a stock market value of just over $200 million.

Stewart’s legal troubles ― she served a prison sentence after being convicted in 2004 of lying to investigators about a stock sale ― have also created headaches for the company. Stewart founded the company in 1997, but a settlement with securities regulators barred her from serving as a director or top executive until August 2011.

While Stewart is planning to return as a board member, the company also announced that Lisa Gersh, a co-founder of Oxygen Media, would be joining the company to run day-to-day business as chief operating officer. She is expected to assume the role of chief executive within 12 to 20 months, the company said, filling a vacancy.

Gersh will be charged with overseeing the company’s three main divisions: publishing, television and merchandising, where it has deals with Home Depot, Macy’s and Kmart, among others. Annual sales from all three divisions have steadily declined since 2008.