J.C. Penney, with CEO Ron Johnson is taking on Macy’s and CEO Terry Lundgren. Both chain stores and CEO’s want Martha Stewart housewares in their stores and this week a courtroom heard what has been going on between the two stores in their attempt to win.
Just days after Wall Street was stunned by a big loss reported by J.C. Penney, CEO Johnson described how the retail chain was attempting to attract Stewart. He offered lucrative inducements that were worth up to $500 million, in an attempt to persuade the home diva to sell her products in Penney’s stores.
Court documents showed e-mails that suggest Johnson was anxiously anticipating how Macy’s CEO would react as Macy’s has a contract of exclusivity with Stewart’s company in place, for certain housewares.
Johnson wrote in one e-mail to one of his top executives in December that Lundgren might be suffering from a headache. The email was sent on December 7, the same day the deal was announced between Stewart and Penney.
Johnson wrote to one of Penney’s larger investors that Lundgren was in a corner, and to the president of Penney’s Johnson wrote that Lundgren now must work again.
The drama should be even greater next week as Stewart is expected to give her testimony. The trial is underscoring how competitive the home goods middle market category is and how important just one brand such as Stewart’s can make a difference.
The home category is not an easy one for large department stores. The category contains towels, sheets, toasters, pots and pans that are available in many other locations, are low margin and sell very slowly.
The suit was filed last year by Macy’s, which has had Stewart’s housewares in its stores for six years, after Penny’s announced it would be selling some of Stewart’s products.