Martha vs. Macy’s: Martha Testified Today

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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.”

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