JCPenney Calls It Quits With Martha Stewart

JCPenney (NYSE:JCP) has thrown in the towel in its fight with Macy's (NYSE:M) over Martha Stewart, the New York Post reported on Thursday (Sept. 5).

Both chains have been waiting for a decision by New York state judge Jeffrey Oing, who presided over a trial this summer in which Macy's sued Stewart for breach of contract and Penney's for interfering with Macy's exclusive contract with Stewart. One of the first high-profile announcements by Penney's ex-CEO Ron Johnson was signing Stewart for a shop-within-the-store as part of Johnson's disastrous effort to remake the 1,100-store chain for more upscale customers.

But according to the Post, Johnson's successor, Mike Ullman, was always unimpressed with the Stewart merchandise. More to the point, it failed to sell in the chain's revamped Home department. The Stewart goods could not bear Stewart's name in Penney's stores because of a ruling early in the trial.

Penney's didn't comment to the Post, and neither did Stewart's company, Martha Stewart Living Omnimedia (NYSE:MSO). But CNBC reported that Stewart herself is saying that her company has no intentions of ending her deal with Penney's. Based on earlier statements by the chain, it may take until the end of 2013 to clear out the existing stock of unbranded Martha Stewart items that JCPenney had already accepted.

Even if Penney's walks away from the deal, that may not end the legal wrangling. Macy's may pursue its claims even after Penney's stops selling the Stewart merchandise, and Stewart might sue Penney's for breach of contract if the Justice Oing declares that the JCPenney-Stewart contract is valid.

For more:

- See this New York Post story
- See this Associated Press story

Related stories:

Macy's, JCPenney, Martha Stewart Trial Should Close Out Today
Analysts: Those Gorgeous New JCPenney Home Departments Will Be Gone By The Fall
JCPenney to Macy's: Let's Make A Deal Over Martha