Martha Stewart Deal With J.C. Penney Annoys Macy's  

6:12 AM PST 12/8/2011 by Georg Szalai

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The retail giant will review its Martha Stewart product line for "potential changes" due to "the proliferation of Martha Stewart-branded product in the marketplace."

 NEW YORK - Retail giant Macy's is no fan of Martha Stewart Living Omnimedia's new alliance with retailer J.C. Penney, which was unveiled Wednesday morning.

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  Lifestyle media firm MSLO said it received $38.5 million from J.C. Penney for a 16.6 percent stake and struck a broader pact to bring Stewart products into the partner's stores.

  However, the deal seems to have annoyed Macy's, which has been selling an exclusive Martha Stewart product line since 2007, the Wall Street Journal reported.  

Macy's will review its Martha Stewart line for "potential changes" due to "the proliferation of Martha Stewart-branded product in the marketplace," the paper cited a company statement.  It added that MSLO only notified Macy's about its new deal on Tuesday night.

  The media firm's five-year deal with Macy's expires around the end of 2012, but can then be renewed, according to the Journal.   Macy's had the opportunity to explore a similar deal given that MSLO's search for partners was public, a person familiar with the media company's thinking told the Journal.

If Macy's were to drop Martha Stewart amid the J.C. Penney deal, it would be "cutting off their nose to spite their face," because it is the retailer's top home brand, the paper cited that person as saying.  

The paper also highlighted that Stewart has been visible in Macy's marketing. She has, for example, been appearing in holiday commercials highlighting "the magic of Macy's."

  J.C. Penney CEO Ron Johnson, who used to run Apple's retail stores, told the Journal that retail chains must share. "A lot of retailers through the years have fought for exclusivity, and at times that's important, but there are certain brands that should be available broadly," he said, adding that he is more focused on being "the best place to buy" Martha Stewart products.  

MSLO president and COO Lisa Gersh and Martha Stewart appeared at a UBS investor conference on Wednesday to tout the new deal with J.C. Penney.

Email: Georg.Szalai@thr.com

Twitter: @georgszalai