J.C. Penney Company, Inc. (JCP) Has a Date With Destiny — and Court

Earlier this year the court gave Penney a partial victory, saying the retailer could temporarily continue selling Martha Stewart Living Omnimedia, Inc. (NYSE:MSO)’s stuff, but couldn’t identify it in any way, shape, or form as being related to her. So as I asked at the time, why bother? If it’s the same cookware and stuff already being sold under the Penney brand, why spend the money for a branding contract you can’t benefit from?

Another fallout from the makeover debacle was Johnson losing his job to turnaround specialist Mike Ullman, who apparently agrees with me, and reportedly is set to ax the agreement because of poor design, sales, and general ennui. Since the Post’s report was based on unnamed sources, it’s said the judge who has been presiding over the lengthy non-jury trial wants to know if it’s true, because it may affect his ruling.

That could mean the penalties for having violated the contract won’t be as severe since it will become a moot point, but the judge could just as well be irked at having wasted several years of time and resources to decide a case that’s getting resolved anyway.

The biggest loser might just be Martha Stewart, who, despite saying she’s still a Penney partner, obviously has the clock running down on her, and Macy’s can’t be all that pleased at how willing she was to dilute her agreement with them.

Regardless of whether it’s good or bad for Penney’s, the outcome will close another sad chapter in the storied history of a once-venerable retailer that still faces the difficult task of restoring its own good name with both the public and the financial markets as it tries to stave off catastrophe.

J.C. Penney’s stock has lost more than half its value over the past year and some 80% from its all-time high reached just before the recession. Despite cloying ads apologizing for its missteps, shoppers haven’t returned and sales last quarter were down 12% from last year, though that’s slightly better than the 16% drop the quarter before.

The retailer can only hope the judge gives it a gift that finally allows it to escape the diva’s clutches and to continue to repair its good name.

The article J.C. Penney Has a Date With Destiny — and Court originally appeared on Fool.com is written by Rich Duprey.

Fool contributor Rich Duprey has no position in any stocks mentioned. The Motley Fool recommends Apple. The Motley Fool owns shares of Apple.

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