As we enter the third day of the battle of the department stores, things are getting heated. Yesterday, Macy's executive, Leonard Marcus, president of Macy's Merchandising Group who helped negotiate the terms if the 2006 deal with Martha Stewart testified that he was hesitant to enter a deal in which he would not own the brand but only to build them up and risk losing them, which is exactly what happened here.
Marcus is one of many executives expected to testify at the hearing. Macy's chairman, CEO and president Terry J. Lundgren, JCP's CEO Ron Johnson, and Martha Stewart are all expected to testify.
One of the main issue to be addressed by Judge Oing is whether MSLO breached its agreement with Macy's when it decided to set up the "shop-in shops" in JCP. MSLO's defense is that they are free to set up shop-in shops because their contract with Macy's allows them to open their own stores and the shop-ins are Martha Stewart stores but located inside JCP. Macy's argued that this is not the same as stand alone boutiques as originally envisioned when they carved out this exception.
On Wednesday, during opening statements, Macy's attorney, Theodore Grossman of Jones Day stated that JCP conspired to have MSLO breach its agreement with Macy's and that MSLO searched for a loophole in its contract to do so even hiring outside advisors. JCP's attorney Mark Epstein emphasized that the contract did not prohibit MSLO from designing from other companies and that this is simply a contract dispute.
Read More:
WWD (sub req'd): Macy's Exec Testified in Martha Case
WWD (sub req'd): Macy's, Penney's, MSLO Square Off in Court
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