Really? Readwaht the New York Times has to say Part 1:
The Headache in Housewares for J.C. Penney
By JAMES B. STEWART
Published: March 8, 2013
Ron Johnson, the former head of retail at Apple and now the chief executive of J. C. Penney, testified this week that he’d never ask anyone to breach a contract. He said he believed in “perfect integrity” as “a matter of principle,” and he readily agreed with the premise that “it’s important to honor contracts even if the terms are unlikable at the time.”
Yet that didn’t stop him from signing a deal with Martha Stewart — his “new best friend,” according to an e-mail — even though she already had an exclusive deal with Macy’s. “Macy’s deal is key. We need to find a way to break the renewal right in spring 2013,” he wrote in one message. “The ball is in her court now to talk to Macy’s about a break in a tight, exclusive agreement they have with her,” he said in another.
The e-mails emerged this week in a New York courtroom, where Macy’s has accused J. C. Penney of inducing Martha Stewart to breach her contract and is trying to block its rival from carrying out its plan to open Martha Stewart boutiques inside J. C. Penney stores.
J. C. Penney has been floundering — it recently reported a staggering $4.28 billion loss in sales for the year since Mr. Johnson became chief executive and announced the layoff of 2,200 workers this week. Its shares have dropped more than 60 percent. So the star-crossed Martha Stewart deal may not be its biggest problem.
But it’s a purely self-inflicted one. With calls mounting for Mr. Johnson’s ouster, the deal is also a window into his judgment, experience and management skills.
Really? Readwaht the New York Times has to say Part 2
“I’m very concerned that this could be a fatal blow to J. C. Penney,” said Walter Loeb, a veteran retail analyst, referring to the lawsuit. That Mr. Johnson “would talk about ‘breaking’ a deal between Martha Stewart and Macy’s is simply incredible. Ron Johnson has never been a chief executive, and I can only assume this reflects his naïveté and lack of experience.”
of the coverage of the trial has focused on the appearance in court of Ms. Stewart, nine years since her conviction and sentencing on federal felony charges of false statements regarding her sale of shares in ImClone Systems (she also settled civil insider trading charges without admitting or denying them).
At one point this week she told the presiding judge, Justice Jeffrey K. Oing of New York State Supreme Court, “I keep looking at this entire episode of this lawsuit wondering why it isn’t — it’s a contract dispute, an understanding of what is written on the page, and it just boggles my mind that we’re here sitting in front of you.”
Justice Oing seemed to agree, and on Thursday ordered the parties to pursue mediation to resolve the matter. Legal experts I spoke to also expressed incredulity that the costly and time-consuming dispute has ended up in court, since the contract itself seems straightforward, with numerous clauses giving Macy’s exclusive rights to Martha Stewart products in various categories, including “soft home,” like sheets and towels, as well as housewares, home décor and cookware, and specifically limits her rights to distribute her products through any other “department store.”
J. C. Penney is undeniably a department store and one of Macy’s major competitors. So the only issue is whether a Martha Stewart boutique within a J. C. Penney store would qualify as a separate Martha Stewart store, since the contract states that the restrictions “shall not apply” to products “marketed or promoted” through the MSLO Web site “or MSLO