After all we’ve done for you, this is how you treat us!
Macy’s is accusing Martha Stewart of a sneaky betrayal in her pursuit of a tie-up with rival retailer JCPenney — made worse by the fact that Macy’s had placed a huge bet on her when her chips were down.
In a thinly veiled reference to the insider-trading scandal that devastated the domestic diva and her company a decade ago, Macy’s said in its explosive lawsuit that it “took a risk” when it signed a long-term contract with Stewart in 2006 — only a year after Stewart had served a five-month sentence in federal prison.
“The ‘Martha Stewart’ brand was under pressure by very public proceedings and their aftermath involving Ms. Stewart,” Macy’s charged in the scathing Jan. 23 suit made public yesterday, noting that it had begun talks with Stewart in 2005, when she was still under home surveillance by law enforcement.
To make matters worse, Macy’s said its “risk was further compounded by the challenge of moving Martha Stewart branded goods upscale” from Kmart, where Stewart had watched her bed linens and kitchenware languish at stores that became increasingly dilapidated after Kmart’s takeover by tight-fisted hedge-fund tycoon Eddie Lampert.
Macy’s has asked a New York state judge for a restraining order to prevent Stewart’s tie-up with Penney from moving forward. On top of a 10-year, $200 million licensing deal announced Dec. 7, Penney shelled out $38 million for a 17-percent stake in Stewart’s company, Martha Stewart Living Omnimedia.
“Macy’s had been kept in the dark and learned of the ‘alliance’ only the evening before the announcement,” Macy’s said in its complaint.
Sources said Stewart plans to argue that she isn’t breaking the Macy’s contract because she technically will be selling the merchandise at Martha Stewart stores — located inside, but distinct from, Penney stores.
“We value our relationship with Macy’s and are confident that we are not breaching the terms of our agreement,” a spokeswoman for MSLO said.
Nevertheless, Macy’s charges that when it wrote to demand an explanation, MSLO execs, including president Lisa Gersh, instead called for a face-to-face meeting Dec. 15, in which they “utterly failed — and did not even try — to provide Macy’s with any assurance” that the Penney deal didn’t violate the Macy’s contract, the suit charged.