Macy’s Hauls Martha Stewart Into Court

Stewart's new deal with J.C. Penney has Macy's in a litigious dither

   
Macy’s Hauls Martha Stewart Into Court

Macy’s (NYSE:M)  has a bone to pick with Martha Stewart Living Omnimedia (NYSE:MSO). Apparently, the retailer isn’t at all pleased that Stewart has recently made a deal to sell its wares through Macy’s rival J.C. Penney (NYSE:JCP), so it has filed suit to block the deal.

In early December, the Stewart-Penney agreement made waves with investors when it was announced that the retailer would be taking a 16.6% stake in the maker of all things domestic. MSO shares leaped 33% on the Dec. 7 news.

The deal, a 10-year partnership, would include mini-Martha Stewart shops housed inside Penneys nationwide. In addition, Penney gained two seats on the Martha Stewart board of directors.

Macy’s doesn’t like this, and it’s now suing to stop it. Macy’s claims that its prior agreement with Stewart was exclusive. The suit was filed under seal yesterday in New York, so the details aren’t available.

But as The Wall Street Journal notes today, “The dispute gets at core issues for the companies. Home is an important segment for department stores. The category made up 15% of Macy’s $25 billion in sales in 2010. Home sales were 18% of Penney’s total sales in 2010, but have been the department store’s worst performer.”

As for Martha Stewart, the Journal points out that licensing and merchandising agreements are “a key source of profit” for it. The fight over who’s wearing the pants in this house could be an interesting one.


Article printed from InvestorPlace Media, http://investorplace.com/2012/01/macys-sues-martha-stewart-jcpenney/.

©2014 InvestorPlace Media, LLC

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