Ex-Martha Stewart Chairman Proposed Macy’s Match Deal

Ex-Martha Stewart Living Omnimedia Inc. (MSO) Chairman Charles Koppelman said his recommendation to offer Macy’s Inc. a chance to match a proposal from J.C. Penney Co. (JCP) was rebuffed by his board.

Koppelman testified today that he told Martha Stewart and the company’s board that he wanted to give Macy’s Chairman Terry Lundgren “the opportunity to do the deal that J.C. Penney was proposing” even though he wasn’t involved in the negotiations.

“Their view was that that was not something I should do,” Koppelman testified today in New York State Supreme Court in Manhattan in a nonjury trial of Macy’s lawsuits against Martha Stewart Living and J.C. Penney.

J.C. Penney in December 2011 acquired a 17 percent stake in New York-based Martha Stewart Living for $38.5 million as the department-store chain seeks to revive sales with new mini- stores dedicated to Martha Stewart and other brands.

Macy’s, which has sold Martha Stewart-branded home goods since 2007, sued her company in January 2012, saying it had the exclusive right to sell items in certain categories including bedding and cookware. Macy’s sued Plano, Texas-based J.C. Penney about three months later.

Some Categories

Koppelman said there “certainly was exclusivity” in some categories of goods in its contract with Macy’s.

“I’ve never read the contract but there certainly was exclusivity in the categories that were listed in the contract,” Koppelman testified.

In her testimony on March 5, Martha Stewart said she believed her namesake company was “absolutely allowed” to design home goods for J.C. Penney in exclusive categories even though it had a contract with Macy’s.

“We thought, and appropriately so, that we were absolutely allowed to do such a thing,” Stewart said.

Martha Stewart Living has defended its agreement with J.C. Penney, accusing Macy’s of breach of contract and saying the retailer stocked and priced Martha Stewart products in a manner that favors private-label brands. Martha Stewart Living also said Macy’s couldn’t have exercised a five-year renewal option in January 2012 because of the breach.

The cases are Macy’s Inc. (M) v. Martha Stewart Living Omnimedia Inc., 650197/2012; Macy’s Inc. v. J.C. Penney Corp., 652861/2012, New York State Supreme Court (Manhattan).

To contact the reporter on this story: Chris Dolmetsch in New York State Supreme Court in Manhattan at cdolmetsch@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.

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