Mag Bag: MSLO Settles With Macy's

by , Jan 2, 2014, 2:47 PM
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MSLO Settles With Macy's

Martha Stewart Living Omnimedia and Macy’s have settled their legal dispute concerning merchandising rights out of court. The terms of the settlement are confidential and won’t have a material impact on either partner’s performance. Macy’s lawsuit against MSLO’s erstwhile partner J.C. Penney will continue, according to the release announcing the agreement.
MSLO and J.C. Penney unveiled a licensing and merchandising deal in December 2011, calling for the creation of mini-stores carrying Martha Stewart-branded product lines in J.C. Penney stores. Macy’s then sued both MSLO and J.C. Penney, arguing that their deal violated the terms of its own contract with MSLO, under which Macy’s claims exclusive rights to certain categories bearing the Martha Stewart brand, including bedding, bath and cookware product lines.
In July 2012, the New York State Supreme Court ordered MSLO to pause its work with J.C. Penney to create mini-stores, although the injunction allowed J.C. Penney to continue to sell some products originally created for the MSLO merchandise deal under a new brand, J.C. Penney Everyday.
In October of this year, JCPenney announced that it will terminate its troubled partnership with Martha Stewart Living Omnimedia in 2017 -- four years earlier than previously agreed -- and will also return 11 million shares in MSLO that it purchased as part of the deal, equal to around 17% of the company. The move was interpreted as a victory for Macy’s. JCP also reduced the scope of MSLO’s design duties to product lines in window treatments and holiday goods -- product categories not precluded by Macy’s agreement with MSLO.
The early termination of the partnership was also a setback for MSLO, which was supposed to reap $200 million over 10 years from merchandising fees -- revenues that would help offset losses resulting from the secular decline in print advertising revenues and the end of some of MSLO’s TV ventures.
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