Macy's Suit Says Retailer Took Risk on Martha Stewart When She Was in Trouble

NEW YORK - In a lawsuit trying to put a hold on Martha Stewart Living Omnimedia's recent deal with rival retail giant JCPenney, Macy's argues that it took a big risk on the domestic diva when she was down on her luck, the New York Post reported.

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The lawsuit was brought last month, but made public on Thursday.

“The ‘Martha Stewart’ brand was under pressure by very public proceedings and their aftermath involving Ms. Stewart,” the Post quoted from the suit. That was a reference to an insider trading scandal that had led Stewart to serve a five-month prison sentence.

Macy’s suit argued that the company “took a risk” by signing a long-term contract with the company in 2006 after starting deal talks when Stewart was still under home surveillance, according to the Post. Macy’s argued that its risk was compounded “by the challenge of moving Martha Stewart branded goods upscale” from previous retail partner Kmart.

Macy’s asked a New York state judge for a restraining order on the Stewart-JCPenney deal, which already saw the latter take a 16.6 percent stake in Martha Stewart Living Omnimedia. As previously reported, Macy’s said it was not aware of MSLO's decision to switch alliances until the evening before the JCPenney deal was announced.

The Post said MSLO plans to argue that it isn’t breaking the Macy’s contract because company merchandise will be sold at Martha Stewart-branded stores inside JCPenney stores. “We value our relationship with Macy’s and are confident that we are not breaching the terms of our agreement,” a spokeswoman for MSLO told the paper.

Email: Georg.Szalai@thr.com

Twitter: @georgszalai