Martha Stewart Living Omnimedia (NYSE: MSO) was sued last week by Macy’s Inc. (NYSE: M) for breach of contract following the homemaking company’s announcement of a new deal to sell Martha Stewart branded products at J.C. Penney Co. (NYSE: JCP) stores. Macy’s contract runs through 2018.
Citing a loophole in the contract, Martha Stewart claims that the company’s exclusive deal with Macy’s allows Martha Stewart to sell its own products from a Martha Stewart Living Store. Because the area in the Penney stores will be “distinct Martha Stewart retail stores,” Stewart and Penney believe that they are not violating the terms of the Martha Stewart contract with Macy’s.
Macy’s notes that the “distinct” stores will be staffed by Penney employees and all revenues will accrue to Penney’s.
The dispute casts a bit of a pall over new CEO Ron Johnson’s plans to re-invigorate Penney’s business.
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