NEW YORK – Macys CEO Terry Lundgren testified on Monday that he hung up on home diva Martha Stewart after she called to inform him on Dec. 6, 2011 that the company that bears her name had inked a deal with J.C. Penney to open shops within most of the chains stores.
He hasnt spoken to her since, even though the two used to be good friends.
I was sick to my stomach, Lundgren testified on Monday in New York Supreme Court. I cant remember hanging up on anyone in my life.
The testimony comes as Macys Inc. and J.C. Penney Co. duke it out in court over the partnership with Martha Stewart Living Omnimedia. The trial, which began Wednesday, focuses on whether Macys has the exclusive right to sell Martha Stewart branded cookware, bedding and other products. Other key witnesses expected to take the stand this week include Penneys CEO Ron Johnson and Martha Stewart, who founded Martha Steward Living.
Martha Stewarts brand has been important to Macys. Under Lundgrens leadership, Macys has focused on building exclusive brands like Martha Stewart that are not carried by rivals to get shoppers to the store.
In the home area, exclusivity is key. Lundgren testified on Monday that Macys had built the Martha Stewart brand to be the biggest in its home business. Sales last year were up 8 percent, double the rate for the entire company.
Lundgren said Macys has spent 40 percent of its overall marketing on the Martha Stewart brand even though the home category represents 17 percent of sales. He said that having Penney have access to the brand will not be good for the business.
His testimony is a culmination of a legal battle between the three companies that started in 2011. Macys sued Martha Stewart Living in January 2011, saying the company breached a long-standing contract when it penned the deal with Penney, which invested $38.5 million in a nearly 17 percent stake. In a separate lawsuit, Macys sued Penney claiming it had no regard for the Macys contract and that Johnson had set out to steal the business that it had worked hard to develop.