JCPenney to Macy's: Let's Make A Deal Over Martha

JCPenney's (NYSE:JCP) new CEO, Mike Ullman, is pushing to settle the chain's legal battle with Macy's (NYSE:M) over Martha Stewart (NYSE:MSO) merchandise. Ullman personally called Macy's CEO Terry Lundgren in an effort to jump-start a settlement, the New York Post reported Thursday (April 11).

In a deal reportedly under discussion, JCPenney would back away from a 10-year, $200 million licensing agreement with Martha Stewart Living Omnimedia (MSLO) that, Macy's says, violated a contract MSLO already had with Macy's. In exchange, Macy's would let JCPenney sell $100 million worth of existing home-goods inventory designed by Stewart but without her name on the package. JCPenney plans to clear out merchandise already in warehouses under the "JCP Everyday" label.

Ullman has good reason to want out of the Martha Stewart license. His chain can ill afford an expensive legal fight set up by his predecessor, Ron Johnson, in December 2011. JCPenney also acquired a $38.5 million stake in MSLO at that time, which is now worth only $28 million; more legal wrangling won't help MSLO's stock price. In addition, the brand value of Martha Stewart has declined in the past year, so it will be less useful to JCPenney as Ullman tries to get the struggling chain back on its feet.

Also on Thursday, New York state Justice Jeffrey Oing pushed all three parties in the lawsuit to settle, after denying a motion by MSLO lawyers to dismiss Macy's breach-of-contract claims. That came the day after the judge ruled that MSLO did not breach its Macy's contract when it told JCPenney the terms of that agreement.

"This is a business deal that you should not have courts getting involved in," Oing said, according to a Reuters report. "It's getting to a point where the clock can't be turned back. The ship is ready to sail."

For more:

-See this New York Post story
-See this Wall Street Journal story
-See this Reuters story

Related stories:

JCPenney's Johnson Is Out, Ullman Is Back. Now What?
At JCPenney, Everybody Gets A POS iPod In March
Macy's Mobile Connection Conundrum: Customers Won't Work Very Hard To Watch Your Commercials

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