Macy’s CEO Dukes It Out With Martha Stewart
Macy’s chief executive Terry Lundgren is so pissed at Martha Stewart that he actually testified against her in court on Monday.
I don’t blame him. Lundgren is angry because in December 2011 Stewart called him to say she had betrayed his company and inked a deal with J.C. Penney to host little Martha Stewart boutique shops in Penney’s locations.
So you’re probably thinking, “OK…I don’t…what? Why would Macy’s CEO even care about some lady expanding her brand into other stores?” Well, that’s mostly because Stewart isn’t actually allowed to have partnerships with both companies, not to mention she and Lundgren were actually really good friends. Macy’s, for awhile there, had EXCLUSIVE rights to sell Stewart’s line of cookware, bedding and other random goodies.
‘‘I was sick to my stomach,’’ Lundgren testified on Monday. ‘‘I can’t remember hanging up on anyone in my life.’’
Awww, poor CEO is all upset because some lady broke his heart. You’re preaching to a very large choir, friend.
Anyway, this is just the beginning of one long, arduous court journey between Macy’s and Penney’s while they argue about who has the right to sell Martha Stewart’s brand. The pre-trial begins today, and it focuses on whether Macy’s can put a complete end to Penney’s Martha Stewart hopes and dreams. We should expect to see Ron Johnson (J.C. Penney’s CEO) and Martha Stewart on the stand as well.
Lundgren said that Macy’s had BUILT the Martha Stewart brand from a pathetic little nobody to the super queen it is today, and that’s worth something. Macy’s actually focused so much on building the Stewart brand that sales on its merchandise—not sold by competitors—were up 8 percent last year. Lundgren even said that his company had spent a whopping 40 percent of its marketing budget on marketing JUST Martha stuff, even though the “home” category only really drives 17 percent of sales.
We’re really angry about 17 percent, here? Why yes, we are. Even though it takes a bit longer to sell home wares and other junk in the “home” department, it brings people to the store when they have a fabulous sale, which is what keeps a big store like Macy’s in business when so many others like it have kicked the bucket. “I need the Martha Stewart business to be exclusive,” said Macy’s CEO. I’m starting to think he’s pretty sad about this whole mess.
There’s a pretty big clusterscrew going on in court. Macy’s is suing Martha Stewart Living because it breached contract when it made a deal with Penney’s. But Penney’s invested $38.5 million in Martha Stewart Living, so…that’s a problem. THEN, in another lawsuit in the same realm, Macy’s is also suing Penney’s for “having no regard to Macy’s contract,” and that it is “stealing a business that Macy’s developed.”
So…you might think Macy’s has this in the bag. I took one look at this lawsuit and laughed until I couldn’t laugh anymore. Does Penney’s really think it stands a chance? Martha Stewart Living should just give Penney’s its money back and be done with the whole thing. But…there is a loop hole. A tiny, insignificant, loophole in the agreement with Macy’s.
The contract indicates that Martha Stewart is allowed to sell goods in categories – like bedding – in Martha Stewart Living’s OWN PERSONAL stores, even if those items are exclusive to Macy’s. But the agreement doesn’t say “stand-alone” stores. It just says “stores.” Since Penney’s is setting up in-store Martha Stewart Living stores, technically this isn’t a breach of contract.
It’s damn dirty, though, especially since Penney’s had no way of doing that unless it demanded information out of Martha Stewart Living’s execs that was confidential and classified. I mean really, this is downright betrayal. And for what? A lousy $38.5 million? After a company spent years building your brand FOR YOU, you’re going to turn around and tell it that its time and effort is worth nothing to you, and whore yourself to the next big company to step into the limelight?
Shame on you, Martha, and shame on your company for being a gigantic douche to those who have treated you so well.
[Image via Sam Aronov/Shutterstock]
I want more stuff like this!