Monthly Archives: March 2013

Martha vs. Macy’s: Judge Orders Mediation, NY Times Article on Why the Case Matters

Martha in Court

Yesterday, the New York Times had an article on the subject underlying the current court case between Macy’s and MSLO: that it is essentially “a schoolyard fight between two boys — the chief executives of Macy’s and J. C. Penney — over the most popular girl on the playground.”

If you have been following MSLO lately, you would not be blamed for worrying about the current state of the company–the stock price has plummeted and stabilized at the low end, the company is heavily vested in traditional media (which is undergoing much tumult industry-wide) and has suffered layoffs, it has all but lost its television presence, and there is unsettled leadership (former CEO Lisa Gersh stepped down after only five months at the helm). The one fiscal bright spot at the company of late has been its merchandising. Simply, Martha is still seen in the eyes of the public as an arbiter of good taste and high quality, and most importantly, consumers trust her. If Martha says it’s a good thing–you can be sure it’s a good thing.

It is Martha’s reputation for producing good products that the two retail giants–Macy’s and JC Penney’s–are hoping to leverage in their stores. Indeed, embattled JC Penney’s CEO Ron Johnson’s job may depend on his Martha Stewart-anchored plan to resuscitate that company’s housewares department. And, as the Associated Press reported:

“[Macy’s CEO Terry] Lundgren said Macy’s has spent 40 percent of its overall marketing on the Martha Stewart brand and other labels in the home area, even though the home category represents 17 percent of total sales. That’s because even though the home area is typically slow turning, it drives shoppers to the store. “I need the Martha Stewart business to be exclusive,” Lundgren said. “I don’t have a substitute.”

The judge ordered the three companies into mediation on Friday, in an attempt to have them resolve the issues themselves without a court-ordered judgement. So, even as the courtroom drama continues, one thing is for certain: the Martha Stewart brand is still as strong as ever in the eyes of consumers. And that is most definitely a good thing for MSLO.

Check out this very flattering quote from the New York Times article :

It is easy to forget that Ms. Stewart altered the way that people live by decoupling class and taste. Part of the reason that she seems embattled — her media empire is shrinking fast — is that she won her corner of the culture war. When you go into Target or Walmart and see a sage green towel that is soft to the touch, it may not carry her brand, but it reflects her hand. Her tasteful touch — in colors, in cooking, in bedding — is now ubiquitous; she just doesn’t get to cash all the checks anymore.

Tagged , , , , , , , , , , , , ,

Martha on The Today Show: Makes Meatloaf and Discusses Trial

Martha Stewart is interviewed on The Today Show, March 6, 2013

On Wednesday, Martha stopped by The Today Show and, as she regularly does, taped a cooking segment–for Big Martha’s Meatloaf. During her visit, she also spent a moment to sit with Matt Lauer for an very difficult interview. Lauer was pretty tough on Martha–but Martha was unfazed. She answered with typical aplomb, defending her company’s mission to offer products wherever customers want them. She was also characteristically diplomatic, choosing her words carefully to describe her thoughts about Macy’s CEO, Terry Lundgren. Lundgren famously hung up on Martha when she phoned to let him know about the new partnership with JC Penney.

The interview was preceded by this video, a short piece covering Martha’s appearance in court the day before. According to this report, the trial could finish by Friday of this week. If it does not, it may be as late as sometime in April before the judge rules on the lawsuit.

From the transcript of the interview:

Lauer: Do you believe your products in [JC Penney] stores could help turn around that company?

Martha: Well, as I said yesterday, [JC Penney CEO] Ron Johnson is a visionary. Ron Johnson worked very hard on all those fantastic Apple stores. He also had a lot to do with the great success of Target before that. Ron is a visionary. He is trying to reimagine the retail landscape, and that’s a big job. And he has not been given any time at all to do so. It takes a little while to rebuild something like a JC Penney; a monolith like that.

Lauer: We are going to follow this story, Martha. Thank you for coming in this morning. I know it wasn’t easy for you to sit down and do this.

Martha: Well, thank you very much. And I’m going to go home and make meatloaf! (laughs)

Tagged , , , , , , , , , , , , ,

Martha vs. Macy’s: Martha Testified Today

martha_boxing

As you probably know, the Martha vs. Macy’s trial has begun. Let’s recap the relevant developments:

– In 2005, MSLO and Macy’s enter into an agreement to sell Martha Stewart branded items in Macy’s stores. The agreement gives Macy’s exclusive rights to sell Martha Stewart branded items in specific categories: bedding, bath, cookware, and dinnerware. Importantly, the agreement also contains language that allows MSLO to sell Martha Stewart branded items outside Macy’s stores, as long as they are sold in stand-alone Martha Stewart stores. (For at the time, there was a single Martha Stewart store in Japan.)

– In 2011, MSLO entered into a partnership with JC Penney to sell Martha-branded items in dedicated spaces inside JC Penney stores, essentially creating a Martha Stewart “store within a store” in JC Penney stores nationwide.

– In 2012, Macy’s sued both MSLO and JC Penney, claiming that the partnership was a breach of Macy’s exclusive right to sell Martha Stewart branded items in the specific product categories. Initially, Macy’s asked the judge to order MSLO to cease any collaborative efforts with JC Penney until after the issue was resolved at trial. However, the judge did not allow Macy’s request.

– Since then, MSLO and JC Penney have forged ahead to create MarthaHome, a “store within a store” offering three collections of products: MarthaPantry (food items), MarthaCelebrations (paper party products), and MarthaWindow (window treatments). It is also known that MSLO designers are working with JC Penney to create the “JC Penney Everyday” collection, which will offer products in those categories to which Macy’s claims to hold exclusive rights. In order to adhere to the MSLO-Macy’s exclusivity agreement, the JC Penney Everyday products will NOT have any Martha Stewart branding on them. (Although there is a connection: “Martha Stewart Everyday” was the name of Martha’s collection sold at Kmart stores from 1997 – 2009. Also, MSLO has for many years had a publication called “Everyday Food”, which also inspired a popular TV cooking show, also called “Everyday Food”.)

Today, Martha appeared in court and testified for four hours. She said that she believed her agreement with JC Penney was structured to be in compliance with the MSLO-Macy’s agreement. She also claimed that Macy’s had breached the contract by not maximizing sales of the Martha Stewart Collection at its stores. Martha claimed that she wanted to open Martha “store within a store” concept in Macy’s, but they were cool to the idea.

The trial is expected to last several weeks.

From The Huffington Post:

The biggest opportunities for Martha Stewart Living are in selling products for the home, including bedding, bath and kitchen merchandise. That’s because as the housing recovery gains momentum in the economic recovery, people likely will put more money into their homes.

During her testimony on Tuesday, Stewart said she always wanted to open big shops within Macy’s stores, but the retailer never embraced that concept. Instead, she said the merchandise in Macy’s stores is just “here and there.”

That’s why she said that a proposal from Penney’s Johnson to create shops filled with home merchandise was appealing to her. She called Johnson a “visionary.”

“We hoped this business would be growing,” Stewart said. “It just boggles my mind that we’re here sitting in front of you, judge.”

Tagged , , , , , , , ,