Department store retailer J.C. Penney Company, Inc. (NYSE:JCP) seems unable to escape the grasp of domestic diva Martha Stewart, as it’s being hauled back to court after a report by the New York Post suggested it was ending its contract with the home goods retailer. It just may work out in the end after all, though, as the judge has scheduled a hearing for Sept. 25 to hear about this latest development.
He’s about to hand down a ruling over J.C. Penney Company, Inc. (NYSE:JCP)’s selling wares from Stewart despite exclusivity agreements she has with Macy’s, Inc. (NYSE:M), and this reports might color what he decides.
J.C. Penney Company, Inc. (NYSE:JCP)’s got caught up in the crosshairs of the legal system after purchasing a near-17% stake in Martha Stewart Living Omnimedia, Inc. (NYSE:MSO) as part of former CEO Ron Johnson’s bid to remake the retailer. Out went regular doorbuster sales; in came low, everyday pricing. Stores-within-a-store, separated by brand, became de rigueur. It would be stealing a page or two from Apple‘s successful branding strategy, which Johnson knew so well since that’s from where he came, with trained personnel giving out tips and advice.
Of course, we know how this story played out. Almost from the get-go, shoppers who had once been loyal to J.C. Penney Company, Inc. (NYSE:JCP)’s left the retailer in droves, heading instead to Macy’s, Inc. (NYSE:M) and rival Kohl’s. Sales at the department store chain plunged from $17.8 billion in 2010 to under $13 billion last year. They’re down another 22% over the last 12 months from the same period a year ago as consumers voted with their feet that they didn’t like not having sales. It didn’t matter that they were actually saving money under Johnson’s plan; shopping isn’t always a rational decision, and the idea that they thought they were getting a better deal with blowout sales mattered more.
It also didn’t take long for Macy’s, Inc. (NYSE:M) to weigh in on its deal with Martha Stewart Living Omnimedia, Inc. (NYSE:MSO). Following the diva’s release from jail for insider trading, Macy’s took a risk in 2006 and spent a lot of money rehabilitating her image with an exclusive deal to sell her home goods. It sued J.C. Penney Company, Inc. (NYSE:JCP)’s — and then Stewart — for violating the exclusivity arrangement, even though J.C. Penney Company, Inc. (NYSE:JCP)’s items weren’t the ones covered by the contract. Macy’s said: Doesn’t matter, exclusive is exclusive.