'Boggled' Stewart Defends Deal With Penney

It seemed like déjà news all over again in Manhattan yesterday: Paparazzi jockeying for position outside the state courthouse, scribes jostling for a seat inside and Martha Stewart –- “dressed in a short brown skirt and matching vest over a cream-colored shirt,” according to Reuters’ Karen Freifeld -- in the glare of it all. 

Only this time, Stephanie Clifford reports in the New York Times, the 71-year-old omnimaven of fashion, décor, media and frying pans was not facing charges of inside trading in a federal court but rather “[presenting] cool, crisp testimony meant to support her attempt to sell her home merchandise not just through Macy’s, with which she has an exclusive contract in some categories, but also through its rival, J.C. Penney.”



The two companies announced in December 2011 that they were entering a 10-year partnership “featuring Martha Stewart products, know-how and advice,” CNN Money reported at the time, in return for Penney paying $38.5 million for a 16.6% stake in the company and a seat on the board.  

Macy’s filed suit to block the agreement the following month, saying that it violated its own exclusive arrangement with the brand, Chad Bray and Dana Mattioli reported in the Wall Street Journal, and it “asked for the suit to be sealed to protect confidential information.” 

Martha Stewart Living Omnimedia defended itself and filed counterclaims the month after that, Bloomberg’s David McLaughlin reported, issuing a release that “Macy’s simply has no exclusive right to MSLO’s creativity or design concepts, now or in the future.”

New York State Supreme Court justice Jeffrey Oing granted Macy’s request for a preliminary injunction after reviewing the evidence. “The scale tilts in favor of Macy’s,” he said in July 2012, Reuters' Freifeld reported

It finally came to a head in the nonjury trial, which began in Oing’s courtroom on Feb. 20, and the AP’s Anne D’Innocenzio laid out the pros and cons of the case from both sides in a dispatch filed that day. 

On Monday, the AP reported that Oing told Penney’s attorneys “that the chain took a risk by ordering towels, cookware and other products from the company that home diva Martha Stewart founded. In fact, Oing said he could force Penney to stop the products from heading to the shelves this spring even as they come off the docks.

“That’s the risk your client took,” Oing said. “Ultimately, you guys played it out.”

But Stewart obviously has a different take on the situation, saying yesterday that the deal with Penney “was an earnest, honest and forthright business decision for her company,” Reuters’ Freifeld reports. “It just boggles my mind that we’re sitting here,” she told the assembled.

“Her testimony came after Macy’s CEO Terry Lundgren told the court last week that he was ‘sick’ to his stomach when Ms. Stewart told him in December 2011 about the Penney pact and hung up the phone when she said it would benefit both companies, Bray tells us in today’s WSJ. “Ms. Stewart described the conversation as ‘acrimonious’ on one side and said Mr. Lundgren ‘was not very talkative.’”

He hung up on her because he believed she was reading from a prepared text. Stewart said she had “talking points” but didn’t recall if they were in front if her.

“Stewart said she ‘loves’ Macy’s, has shopped there since she was a girl and called the store ‘a fixture’ in her home. However, she said her company was ‘not always thrilled’ that Macy’s wasn’t increasing its exposure in the stores. The retailer, for instance, wouldn’t allow her to offer higher-end items such as luxury-bath products, she said,” reports Bloomberg’s Chris Dolmetsch.

“She was married to Macy’s. But she went off and had an affair and got in bed with a direct competitor with J.C. Penney, and I think it just shows really bad form,” Pam Danziger, president of Unity Marketing and an expert on the upscale market, told CNN’s Soledad O’Brien yesterday before Stewart testified. “I don’t think anybody, any other business is beginning to want to get involved with her in the future. I think she’s really hurt her brand and hurt herself.”

Stewart provided some comic relief during her testimony when Martha Stewart Living attorney Eric Seiler, wanting to know how she spent her time at work, had a slip of the tongue.

How do you “do your time?” he asked.

“I did my time,” she shot back -- “alluding to her stint in prison nine years ago after lying about a stock sale,” James Covert reports in the New York Post. “That’ll be the headline," Stewart continued, "read the Post tomorrow.” 

But it actually turns out to be the way the Post closes its story and we’ll take its journalistic lead, if just this once.

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