BIG GAME: Martha Stewart’s allegedly secret deals have retailers fighting it out in court. (
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On her TV show, Martha Stewart is portrayed as the calm, cool domestic diva, with nary a hair or a fork misplaced.
But behind the scenes, the 71-year-old has a reputation for meanness and guile, as her trial with Macy’s last week reminded.
Stewart is accused of violating an exclusivity deal with Macy’s by making a secret deal with competitor JCPenney. The two retailers are going toe-to-toe in a Manhattan courtroom.
Macy’s boss Terry Lundgren now joins a collection of disgruntled former business partners that stretches back nearly 40 years to Norma Collier, a college friend who began a catering business with Stewart in the late 1970s.
Accusing Stewart of booking events behind her back and keeping the cash, Collier branded Stewart “a sociopath and a horrible woman,” according to the book, “Martha Inc.,” by Christopher Byron.
Collier’s reported allegations of Stewart’s “pathological lying, lack of empathy and parasitic and manipulative behavior” actually better fit the definition of a psychopath, according to Harvard psychologist Ellsworth Fersch, who wrote a chapter on Stewart in his book, “Thinking About Psychopaths and Psychopathy.”
Stewart’s media empire of magazines and TV shows never recovered after she was imprisoned for five months in 2004 for lying about a stock sale, leaving her image with American consumers in tatters — and her company, Martha Stewart Living Omnimedia, with its merchanding, broadcasting and publishing arms, without their leader.
In recent years, fickle pop cultural fads have crushed her broadcasting business and the shift away from print has hurt revenue from publishing. MSLO’s one remaining bright spot has been her merchandising business.
Yet the domestic diva has now thrown that growing merchandising operation into jeopardy as she tangles with Macy’s over a controversial agreement she cut with rival department store JCPenney in December 2011.
“The one positive thing for Martha now is that she’s got two major retailers fighting over her,” said Michael Stone, president of The Beanstalk Group, a New York branding and licensing consulting firm. “But to the extent people are paying attention to what’s really going on in this case, I don’t think it’s good for her brand.”
What’s troubling, according to critics, is Stewart’s pattern of behaving as if normal rules don’t apply to her — that the only thing that matters is that she be allowed to enrich herself, whether by flouting insider trading rules or contracts with business partners and investors. Whether or not her controversial JCPenney deal survives in court, the hit her reputation has taken on Wall Street could make it her last.
More dirt came out on Friday, when court documents revealed that JCPenney CEO Ron Johnson had initially agreed to give Stewart a personal licensing fee equal to 2 percent of sales on a new line of home products — a highly unusual and lucrative arrangement that would have diverted hundreds of million of dollars away from her cash-strapped company and its shareholders and into her own pocket.
“Martha can earn $500 million if things go well and I don’t think anyone else could provide this to her,” Johnson wrote in an Aug. 19, 2011, e-mail to Peter Cohen of Blackstone Group, MSLO’s financial adviser, which came out at the trial.
Plans for Stewart’s personal bonanza were scrapped before the contract was inked months later, after her lawyers advised against it, according to a source.
Still, MSLO’s lawyers have failed to prevent a corporate-governance nightmare as Stewart grants herself lavish compensation in the form of multimillion-dollar salaries, retention bonuses and licensing agreements with her own company.
That’s despite dwindling sales, profits and cash at MSLO. Last week the company reported net income slid 74 percent in the fourth quarter to just $1.1 million, while revenue slid 9 percent to $56.4 million.
The news sent MSLO shares tumbling near multiyear lows, closing on Friday at $2.48. On Feb. 25, 2005, as news of Stewart’s impending release from prison flooded the media, shares of MSLO closed at $36.07.
Critics say regardless of the trial outcome, Stewart will prevail with her me-first attitude.
Judging by statements last week from Martha Stewart Living Omnimedia, which coolly argues that a loophole in its Macy’s contract allows it to open what it calls “stores” to sell a second line of home goods inside Penney locations.
“This is not ‘Miracle on 34th Street’ where wishing makes it true, but a simple legal issue,” a spokeswoman told The Post Friday.
Two days earlier, MSLO had complained in a statement that “Macy’s continues to distract with emotional stories that are not relevant.”