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Martha Stewart Defends J.C. Penny Deal vs. Macy’s

Martha StewartMartha Stewart said she believed her namesake company was “absolutely allowed” to design home goods for J.C. Penney Co. in exclusive categories, even though it had a contract with Macy’s Inc.

“We thought, and appropriately so, that we were absolutely allowed to do such a thing,” Stewart testified today in Manhattan in a nonjury trial as Macy’s fights to block parts of Martha Stewart Living Omnimedia Inc.’s agreement with J.C. Penney.

Stewart said she “loves” Macy’s, has shopped there since she was a girl and called the store “a fixture” in her home. However, she said her company was “not always thrilled” that Macy’s wasn’t increasing its exposure in the stores. The retailer, for instance, wouldn’t allow her to offer higher-end items such as luxury-bath products, she said.

“Macy’s has been a very nice partner,” Stewart said. “We have lived up to our obligations under the contract and Macy’s has lived up to most of its obligations under our contract.”

Her testimony, which lasted more than four hours, came after that of Macy’s Chairman Terry Lundgren and J.C. Penney Chief Executive Officer Ron Johnson. Lundgren appeared in court last week and Johnson finished his testimony yesterday.

Macy’s, which has sold Martha Stewart-branded goods since 2007, sued her company in January 2012, saying it had the exclusive right to sell the items in certain categories, including bedding and cookware. Macy’s sued Plano, Texas-based J.C. Penney about three months later.

J.C. Penney in December 2011 acquired a 17 percent stake in New York-based Martha Stewart Living for $38.5 million as the department-store chain seeks to revive sales with new mini- stores dedicated to Martha Stewart and other brands.

Stewart, her company’s chief creative officer and non- executive chairman, said Johnson’s vision of creating a Martha Stewart store within J.C. Penney appealed to her. She said Johnson is a “visionary” who “had the foresight to ‘reimagine’ the traditional American department store.”

Stewart said Macy’s had never offered to open a store devoted to her, although it has installed other in-store shops for brands such as Louis Vuitton.

Lawyers for Macy’s, the second-largest U.S. department store chain, have argued that J.C. Penney is trying to “reap the rewards” of its work with the Martha Stewart brand, which the chain says it rebuilt after Stewart’s release from prison in 2005, when her products were sold at Kmart.

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