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Macy’s Settles Legal Dispute With Martha Stewart Living

A Macy's Bag Sits in a Store in New York
An employee assists a customer at a Macy's Inc. store in New York. Photographer: Ron Antonelli/Bloomberg

Jan. 2 (Bloomberg) -- Macy’s Inc. and Martha Stewart Living Omnimedia Inc. settled litigation over whether Martha Stewart breached a contract by selling certain goods at J.C. Penney Co. The terms of the settlement weren’t disclosed.

Macy’s said today in a statement that the pact doesn’t affect its outstanding claim against J.C. Penney. Martha Stewart and Macy’s both said the terms of the settlement aren’t material to their businesses.

Martha Stewart and Macy’s have been locked in a legal battle since January 2012 over whether Martha Stewart’s agreement to provide merchandise to J.C. Penney violated an earlier exclusivity contract. J.C. Penney said in October that it would roll back its agreement with Martha Stewart to stop making products in categories exclusive to Macy’s and end the partnership in 2017, four years earlier than planned.

Macy’s, based in Cincinnati, declined 0.2 percent to $53.39 at the close in New York. The shares gained 37 percent last year. Martha Stewart gained 8.8 percent to $4.57. At that price, the shares were up 91 percent since Oct. 25, the last trading day before the company named former metals-industry executive Daniel Dienst as chief executive officer.

Macy’s sued Martha Stewart and J.C. Penney in 2012, saying it had exclusive rights to sell Stewart-designed items in categories including bedding, bath and cookware. After the suit, J.C. Penney rebranded the Stewart goods in those disputed categories “JCP Everyday.” Macy’s then pushed for the sales of those items to be stopped because they were designed by Stewart’s company.

$200 Million

The original deal with Plano, Texas-based J.C. Penney, announced Dec. 7, 2011, was supposed to generate at least $200 million in revenue for Martha Stewart Living over 10 years. Sales at Stewart’s company were $169.6 million in the four quarters ended Sept. 30.

J.C. Penney also said in October that it would give back 11 million shares it bought for $3.50 each and the right to board representation at Martha Stewart Living.

Dienst, 48, the former chief executive officer of scrap-metal recycler Sims Metal Management Ltd., joined the Martha Stewart Living board in August.

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

To contact the reporters on this story: Kevin Orland in Chicago at korland@bloomberg.net; Duane D. Stanford in Atlanta at dstanford2@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net

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