Macy's, Inc.(NYSE:M) has slapped a lawsuit on arch-rival C. Penney Co, who will be selling products by Martha Stewart Living, claiming a violation of the contract held only by the former. This move by J.C. Penney could lead to a huge loss in billion for Macy’s. According to the complaint filed Thursday in the Supreme Court of the State of
New York, the contract J.C. Penny has with
Martha Stewart Living for selling its home products next year is illegal and
Macy’s has stated a violation clause because the contract clearly states that they have an exclusive deal wherein they can sell Martha Stewart products till 2018. The deal was signed in 2007 and the product category includes housewares, bedding, bath and cookware. Macy’s has stated that this is a ploy on J.C. Penney’s behalf to secure more market shares and steal the edge that Macy’s has over them due to the contract.
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Apparently, Martha Stewart Living has been coerced by J.C. Penney to breach their contract with Macy’s, which will cost the company an astronomical amount of money and irreparable damage too. Since the figure involved is in billions, Macy’s is willing to put up a fight on their end by seeking unspecified damages and an order instructing to J.C. Penney to forfeit the deal.
A preliminary injunction was issued last month, due to which, products of Martha Stewart Living coming under the category of its agreement with Macy's, were temporarily pulled off the shelves in J.C. Penney Stores. A representative for J.C. Penney has declined to comment on the lawsuit. The company purchased a 16.6% stake in Martha Stewart Living and they had plans of opening mini-shops next year. However, Martha Stewart Living has stated that their contract with Macy’s has not been violated.
Shares of the company ended higher by 0.54% to $38.95 on Friday.