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Ron Johnson couldn’t catch a break yesterday.
The embattled CEO of JCPenney squirmed on the witness stand and quibbled with lawyers who accused him of improperly plotting to steal Martha Stewart away from rival Macy’s.
One key bone of contention: the meaning of the word “break,” which Johnson used in numerous e-mails as he allegedly tried to trick Macy’s CEO Terry Lundgren into breaking his distribution contract with the domestic diva in late 2011.
Johnson, on the stand in Manhattan state court, insisted he merely meant that Stewart would have to “amend” her Macy’s contract — not break it — in order for Penney to pursue its own home-goods tie-up with Stewart.
“The word ‘break’ meant there would have to be a change,” Johnson told a packed courtroom, making a rare public appearance in a suit and tie, versus his typical jeans-and-sweater getup.
Johnson — who during the past year has resisted calling sales and clearance events “sales” and “clearances” after radically retooling Penney’s pricing strategy — was in the hot seat for the second time this week.
On Wednesday, Penney disclosed a fourth-quarter loss with sales dropping by a third, news that sent Penney shares plunging 17 percent.
Grilled by Macy’s lawyer Ted Grossman, the former Apple exec admitted he worked doggedly to obtain a copy of Martha Stewart Living Omnimedia’s licensing agreement with Macy’s in fall 2011 — despite being told by MSLO and its adviser, Blackstone Group, that the contract was confidential.
Johnson tangled repeatedly with Grossman as the legal eagle charged that Johnson knew his alleged scheme would “undermine Macy’s competitiveness.” Johnson sought to pressure Lundgren with a surprise announcement on Dec. 6, 2011, that Penney had invested $38.5 million in MSLO while inking a 10-year licensing deal.
“No, that’s not it,” Johnson said, when pressed about a Dec. 7, 2011, e-mail to Bill Ackman, Penney’s largest shareholder, in which Johnson wrote that Lundgren was “in a corner” and liable to make “bad decisions.”
Seconds later, however, Grossman’s team played a videotaped deposition in which Johnson admitted, “I think a bad decision would be for Macy’s to drop Martha, yes.”
In another embarrassing e-mail exchange the same day, Johnson had written to Penney President Michael Francis that his plans would give Lundgren “a full-on migraine,” adding a smiley-face emoticon.
“Is that a smiley face?” Grossman asked.
“Yes, that is,” Johnson said.
Nevertheless, Johnson later told Penney lawyer Mark Epstein that he believed his Stewart deal “could be good for everybody,” including Macy’s, as it would help MSLO get back on its financial footing.
Earlier this week, Lundgren testified he hung up on Stewart when she made a similar suggestion as she admitted she had cut the Penney deal on the eve of its announcement.
“The thought that this was going to be good for Macy’s was so far from anything I could comprehend,” the dapper Macy’s chief said.