Miami shoppers may have heard that Macy's Inc. and Martha Stewart Living Omnimedia Inc. are taking up arms this month in a court dispute over an alleged violation of a contract between the two. The alleged breach of contract came about when Martha Stewart agreed to sell their products at J.C. Penney, a rival of Macy's, despite a previous agreement to exclusively sell at Macy's. Neither company has yet commented on the case.
J.C. Penney's involvement came about when the company's CEO began an effort to bring in a shop-in-shop model to their stores where they would display the wares of Martha Stewart alongside various fashion houses. When Martha Stewart announced their intention to enter into this effort in December, Macy's retaliated with the current business litigation. Concurrently, J.C. Penney is experiencing financial distress, and has seen a 31 percent drop in stock prices over the past 12 months.
Macy's contract with Martha Stewart is said to clearly indicate that the department store has exclusive rights to sell Martha Stewart products such as bedding, bath towels, and assorted housewares and cookwares. The contract dates from 2006 and won't expire until 2018. Should this prove true, Martha Stewart would be in violation of this agreement in their efforts to sell through J.C. Penney.
Should Macy's win this breach of contract litigation, both Martha Stewart and J.C. Penney could see consequences. This could amount to potential payouts from both companies to Macy's, as well as Martha Stewart being prohibited from selling outside of Macy's until their contract expires in 2018. While retailers often attempt to avoid these kinds of disputes, some Miami businesses find that bringing this sort of issue into court resolves matters efficiently and properly.
Source: Crain's New York Business.com, "Macy's court battle with Martha begins Friday," Adrianne Pasquarelli, July 12, 2012