Court Rules Against JC Penney In Macy's/Martha Stewart Flap

JC Penney has had better weeks. Despite stronger-than-expected sales, the retailer posted a loss, disappointing investors. And a New York State appeals court, in a 5-to-0 ruling, revived much of Macy’s case against Penney, charging that it interfered in its Macy’s exclusive relationship with Martha Stewart Omnimedia.

But the court says that while Penney was in the wrong, Macy’s was not entitled to punitive damages. “To be sure, the conduct of JCP's personnel in this case was intentional and clearly below any minimum standard of business practices and ethical behavior,” the court says in its decision. “However, those emails, while distasteful and far beneath what one would expect from executives of a major corporation, are simply part and parcel of the unsavory atmosphere surrounding JCP's conduct.”



Macy’s described the decision as a “resounding victory” in a Reuters report, which also says Penney is considering an appeal.

The Plano, Texas-based retailer says fourth-quarter net sales climbed to $3.89 billion compared to $3.78 billion in the same period last year, with same-store sales gaining 4.4%. Online sales in the period rose 12.5% to $428 million. But it posted an unexpected  loss of $59 million, compared to a gain of $35 million in the year ago period.

The strongest sellers over the holiday were men’s clothing, home and fine jewelry, as well as in its Sephora locations.

Still, company executives say its sales improvement herald a comeback. “We are back in the eyes of our customers, back running the business effectively and back on solid financial footing,” says CEO Myron E. (Mike) Ullman, III, in its earnings release. “We fully intend to build on this momentum and continue to significantly improve our business in 2015.”

For the year ahead, it forecasts comparable-store sales increase of between 3 and 5%.

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