Macy’s, J.C. Penney Return To Court

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The bitter battle for the ability to sell Martha Stewart’s home goods products returned to court today with the CEOs of both companies as well as Martha Stewart ‘potentially’ expected to testify in the coming days. The non-jury trial was forced into recess last month do to scheduling complications and the three parties were forced into fruitless mediation.

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Following an attempt by J.C. Penney Company, Inc. (NYSE:JCP)’s to open in-store boutiques in a number of their stores in order to peddle Ms. Stewart’s wares, Macy’s, Inc. (NYSE:M) sued both J.C Penney’s and Martha Stewart Living Omnimedia last year believing that they had an exclusive contract with Stewart to sell some of her items. The Martha Stewart home products are Macy’s biggest selling item in that niche and J.C. Penney’s believes that they are an essential piece in reviving the struggling retailer.

No stranger to court proceedings, the 71 year old Stewart took the stand last month saying, “We thought, and I hope rightly so, that we were allowed to do such a thing.” The domestic diva then added that she was “flabbergasted” that (Macy’s CEO) Lundgren reacted so strongly. “It didn’t occur to me that there weren’t enough customers to go around,” she said.

By way of illustration just how far apart the sides are in this case, when Terry Lungren tood the stand last month he testified that, “I was literally sick to my stomach,” before adding that they believed they had a friendship that would not allow for such treachery.

The first of Penney Company, Inc. (NYSE:JCP)’s Stewart based mini-stores opened Friday, though a number of the items they had planned to sell were not available to its customers. In a recovery plan that has bordered on disastrous at times the case is a major factor in Penney’s envisioned revival.

Steven Gursky, a New York attorney who specializes in branded product never believed that anything would come out of mediation when sent there last month. “If I was sitting in Macy’s shoes, I’m not sure I’d be willing to compromise,” said Gursky. “Unless Martha Stewart and Penney Company, Inc. (NYSE:JCP) realized they couldn’t take what Martha had already given away to Macy’s, Inc. (NYSE:M), and fold their tents, I don’t know what they have to offer.”

Testimony is set to resume tomorrow.

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