J.C. Penney and Martha Stewart are ending their business relationship, according to several media reports.
The retail chain and Martha Stewart Living signed a 10-year, $200 million deal in December 2011, but it hasn’t lived up to expectations.
Penney is reportedly dropping the Martha Stewart brand of cookware and other products as a result of poor sales and a pending lawsuit filed by Macy’s against Penney and Stewart. The complex lawsuit, which has gone on for 3-1/2 years and is about to be decided, revolves around Stewart’s pre-exisiting licensing deal with Macy’s, which prompted Macy’s to try to stop J.C. Penney from selling certain Martha Stewart-branded goods.
In part because of the litigation, Penney CEO Mike Ullman apparently decided to pull the plug on the domestic diva’s product line. According to a New York Post source, “Ullman made the decision for the judge… They definitely are not going to carry [Martha Stewart home goods] any longer and [they are] not waiting for the court ruling.”
According to ABC News, “The outlook for Martha Stewart merchandise dimmed after [the judge] issued a preliminary injunction in the summer of 2012 that barred Penney from slapping the Martha Stewart moniker on the goods that was covered by Macy’s exclusive agreement until the final ruling was made.”
Penney rebranded some of the Martha Stewart designs as JCP Everyday, but sales have been lackluster apparently because the items are considered too expensive by the average consumer.
CEO Ullman may also remove other Martha Stewart products from the J.C. Penney shelves that have nothing to do with the lawsuit: “In addition, Ullman looks poised to eliminate Penney’s production of Stewart-branded goods that are allowed in a handful of categories not contracted to Macy’s, including window treatments, rugs, crafts and pantry items.”
There has as yet been no confirmation from either J.C. Penney or Martha Stewart about the reported end of their branding deal however.