Leaked details of the settlement reveal that JCPenney would get rid of its 10-year, $200 million contract with Stewart. However, JCPenney asks to be able to sell the Martha Stewart products it already has available for a set amount of time, like six months.
Losing the Martha Stewart line would be a final blow to Ron Johnson's JCPenney turnaround strategy, which centered around finding important vendors like Stewart and giving them in-store boutiques. Johnson, the company's controversial CEO, stepped down Monday after a disastrous, 15-month reign .
Macy's, which has had a deal with Stewart for several years, sued her company for breach of contract shortly after she announced the JCPenney line. The department store also sued competitor JCPenney .
The companies spent several weeks in mediation, but were unable to reach an agreement.
The deal could give JCPenney the stability it needs, according to Brian Sozzi, chief equities strategist at Belus Capital.
"Essentially, the company would therefore have a window of opportunity where it sells one-off products never again to be seen in the store," Sozzi said. "Match that up with a more compelling promotional structure, and it could bring the much needed stabilization in same-store sales everyone is seeking."
Stewart claimed in her testimony that Macy's didn't give her the influence she was seeking, shooting down ideas she had for luxury bath and bridal china lines.
The truce could be reached as soon as this week.
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