Macy’s CEO: ‘Shocked … Sick to My Stomach’ After Betrayal by Former ‘Friend’ Martha Stewart

The Macy's-JCPenney-Martha Stewart squabble has quickly gotten personal, even reminiscent of high school—with accusations of backstabbing, betrayal, and months of deception among executives who once considered themselves "friends."

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You’d think that a contract dispute over department store merchandise exclusivity would be a “strictly business” type of affair. But the Macy’s-JCPenney-Martha Stewart squabble has quickly gotten personal, even reminiscent of high school—with accusations of backstabbing, betrayal, and months of deception among executives who once considered themselves “friends.”

At the heart of the dispute is Martha Stewart, the “devious diva,” in New York Post parlance, whose company, Martha Stewart Living, has had a merchandising contract with Macy’s since 2006. In early December 2011, however, Stewart told Macy’s CEO Terry Lundgren over the phone that hundreds of Martha Stewart boutique stores would soon be opening inside JCPenney locations around the country. “I was completely shocked and blown away,” upon hearing the news, Lundgren testified this week in court, in a trial in which Macy’s is suing both JCPenney and Stewart’s company. “I was literally sick to my stomach.”

Then Stewart reportedly dropped a line that could have come from one of the “Mean Girls,” had one of the characters gone on to work in the corporate world. “She said this was going to be good for Macy’s,” Lundgren said. “I think that’s when I hung up.” For Lundgren, this was a first. “I don’t remember hanging up on anyone in my life,” he said. “The thought this was going to be good for Macy’s was so far from anything I could comprehend.”

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Lundgren hasn’t talked to Stewart since. “I don’t have a personal relationship with Martha Stewart,” he said in court. At least not anymore he doesn’t.

In the months leading up to the stomach-churning, friendship-ending phone call, Lundgren was in regular contact with Stewart and considered her a friend. Stewart regularly asked about Lundgren’s wife in e-mails, according to Bloomberg News. The Post reported that mere weeks before Stewart dropped the news on Lundgren that she was going into business with one of his direct rivals, Stewart hit up the Macy’s CEO for free tickets to $10,000 VIP dinners and the Macy’s Thanksgiving Day Parade.

The Stewart-Lundgren tiff isn’t the only backstabbing aspect of the suit, though. The CEOs of Macy’s and JCPenney, once buddies or at least on collegial terms, also seem to be engaged in something of a catfight. In January 2012, soon after JCPenney CEO Ron Johnson announced the department store’s plans for a dramatic makeover involving “fair and square” pricing, Lundgren reached out to Johnson and wished him the best. According to the Post:

“Thank you, Terry. Your note means a ton to me,” Johnson replied in an e-mail dated Jan. 27, 2012, which was submitted as evidence by Macy’s.

“I consider you a friend.”

At the same time, however, Johnson was trading snarky e-mails with colleagues about Macy’s — including one in which the former Apple exec said Macy’s management “look asleep at the wheel.”

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Cue the cat-whipping-out-claws sound.

Johnson, whose company has struggled mightily and recently given up on several aspects of his much-hyped makeover, is expected to testify in court later this week. Stewart is also expected to take the stand, but it is unclear when. In all likelihood, the two will try to steer the conversation back to business and away from the drama of backstabbing and former friends doling out the silent treatment.

Martha Stewart Living issued a cold statement about the matter, published by Bloomberg:

“This is a contractual dispute … However, rather than focus on the specific terms in the contract that are in dispute, Macy’s continues to distract with emotional stories that are not relevant. The contract is written to allow MSLO to sell a broad range of branded and non-branded products in JCP, including any MSLO-branded products within MSLO stores in JCP. We look forward to presenting our case.”

22 comments
CharleneBatesWestcott
CharleneBatesWestcott

I have purchased Martha's line in KMart and was shocked it showed up in Macy's.  Its all junk.There isn't a product I purchased that didn't fail.   At a time when JC Penney's is failing, I'm surprised they don't concentrate on quality. I used to buy a lot of merchandise from them I can't get any more.  Now I'm not shopping there and cheap Martha Stewart won't bring me back in.  I can go to the Dollar Store.

ElaineArchibald
ElaineArchibald

Thank you BobJan   Is this really NEWS?????????????????????????

notLostInSpace
notLostInSpace

Macy's has no moral high ground.  They have decimated the landscape (with the Romans decimation was to kill 10% of your troops, in fact Macy's has "killed" far more.....) of rivals.  There being no where else to shop, they are not content with their market share...they have to keep Martha for themselves.  Good luck to that, exclusivity is a sharp sword and they may fall on the blade (sorry, been watching Sparticus too much!).

BobJan
BobJan

Who Cares??????????????????????????????????

antonmarq
antonmarq

Oh well, there goes MS sales.... no parade this year. Dahhh.

middleroad
middleroad

as much as I don't like martha Stewart, if Macy's did not put an exclusive rights clause in the contract with Martha's corp they have no reason to be suing her or even upset. I mean, that's like giant food telling cocacola they shouldn't be selling their soda anywhere but there. Did they expect her to not try and expand her business?

DyanSalvia
DyanSalvia

You know what's really sickening? The way Macy's treats it's employees such as the minimum wage you're paid which they then discount from every single sent of commission you make. So forgive me if I can't feel sorry for Macys. 

BeckyFFulton
BeckyFFulton

How is Macy's the "exclusive" carrier of Martha Stewart products when they sell it at Home Depot, they didn't seem to care until it was sold at one of their more direct competitors seems like a BS lawsuit.

DeweySayenoff
DeweySayenoff

Given that there is a massive effort for Macy's to dump "the Donald" as a spokesperson, perhaps Martha has decided she'd rather be selling at a store "where America shops" than one represented by someone who committed open sedition via Twitter on election night by urging revolt against the lawfully elected government of the United States.

Just a thought.


whatdoiknow
whatdoiknow

Anyone got the contract? It either say exclusive to Macy's or not exclusive to Macy's. Personal frenemyships aside, like the line from Godfather says "Nothing personal, just business"


jcq707
jcq707

That's what happens when you give an ex-con a chance !!!!

gchu
gchu

(Contd)

Lundgren rudely hung up on Ms. Stewart and has refused to speak to her, but he is abusing and misuing the legal system to hold her and her team in bondage in a free market economy and ruthlessly destroy jobs in the MSLO-JCP partnership.

Lundgren owes Martha Stewart an apology for his obnoxious conduct.  Lundgren's mindset needs to acknowledge he is not above the law, fair competition is a bedrock principle of the free market economy, and no "exclusivity" existed in a contract he obviously renewed through deceit and trickery in January 2012.  

gchu
gchu

The scorched-earth vendetta of Lundgren and his legal mercenary and Lundgren's pathetic "shocked...sick to my stomach" whining,  are the result of Martha Stewart's legal and ethical conduct in not divulging to Lundgren material non-public insider information on her publicly traded company.

Co-existing with K-Mart, Lundgren never had "exclusive right" on the creative talents of Martha Stewart and her team or the Martha brand.  Instead, Lungren betrayed Martha Stewart with fire sales on her brand as a marketing ploy and paying only minimum royalties to her company.  

Macey's sat on the sidelines, showing no interest in investing in her company and doing nothing more than the fire sales and bare minimum royalties, which remain Macy's plans for the future.    JCP stepped into the void with a substantial capital investment in MSLO and a brilliant strategy to take the Martha brand to the next level with new job creation and jobs for Americans.

(Contd)

StephenGrange
StephenGrange

Can't trust a convict?


What IS the world coming to?

notLostInSpace
notLostInSpace

@famulla5 get lost man, go to a forum where they care about whatever it is you're espousing.......

gchu
gchu

Is "convict" the new namecalling for legal malpractice?  Knowing truth from the facts, "convict" has no relevance to an American icon who can be trusted to live a squeaky-clean life to this very day.

What is the world coming to?  How do you measure up to a squeaky-clean challenge?  

StephenGrange
StephenGrange

@gchu Nah! "Convict is what you call a person who spent time in jail for securities fraud (In this case)

Fla4Me
Fla4Me

@StephenGrange @gchu That is a former stock broker who spent time in jail for securities fraud.  The shock is that Macy's or JC Penny would soil themselves with her.