Business

JCPenney’s behavior ‘childish,’ ‘sophomoric’ in Martha deal

The sneaky deal that JCPenney cut with Martha Stewart behind Macy’s back was such a disaster that the sheer public embarrassment of it is punishment enough.

That’s what a New York judge effectively said in a long-awaited decision Monday, ruling that while Penney improperly interfered with an exclusive Macy’s-Martha Stewart contract, its liability for court
damages was limited.

Top Penney officials under ex-Chief Executive Ron Johnson engaged in “adolescent hijinks in the worst form” as they cut a late 2011 deal to sell Martha Stewart-branded goods in categories already licensed by Macy’s, state Judge Jeffrey Oing concluded in a 63-page decision.

Johnson and other top execs had reveled in an ill-fated plot to blitz Macy’s with their deal, which was soon derailed by Oing’s court injunction after its retail rival promptly sued.

In one e-mail, Johnson told hedge-fund tycoon Bill Ackman, then Penney’s biggest shareholder, that he had put Chief Executive Terry Lundgren “in a corner.”

Lundgren, who had gotten a call from Stewart only hours before the deal was announced, testified at a six-week trial last year that he hung up on the domestic diva because he was so annoyed by the
duplicity.

JcPenney execs, led by ex-Chief Executive Ron Johnson (right), engaged in “adolescent hijinks” when they cut a deal to sell Martha Stewart branded goods already licensed to Macy’s.WireImage; AP

Indeed, Penney execs displayed “sophomoric,” even “childish behavior” that is “unbecoming of top executives at a major corporation,” Oing wrote. The judge noted that Johnson, fired in April 2013, was “a casualty of his own hubris.”

Nevertheless, Oing said Macy’s fell short of proving that Penney’s conduct was “wanton, reckless, malicious,” with a “high degree of immorality.”

“JCP, its board of directors and its top executives were publicly ridiculed and humiliated as a consequence of this trial.

Their grand strategy was a colossal and abject retail failure,” Oing wrote. “I find that these significant facts are a sufficient deterrent to JCP and other companies from acting in a similar way in the future.”

Macy’s said it was “delighted” by the ruling and looks forward to the damages phase of the trial, which Oing has referred to a court referee.

Penney said it was “disappointed” and is weighing an appeal.

jcovert@nypost.com