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Emotional Testimony in Macy’s-Martha Stewart Case

Laurene Gandolfo, executive vice president of home at Macy’s Merchandising Group, took to the witness stand.

NEW YORK — Laurene Gandolfo, executive vice president of home at Macy’s Merchandising Group, brought a little emotion to the witness stand in Macy’s Inc.’s legal battle against J.C. Penney Co. Inc. and Martha Stewart Living Omnimedia Inc.

Gandolfo, who oversees production of Martha Stewart goods for Macy’s, said she was excited when the chain cut a 2006 deal to partner with the home goods brand. A fan of Martha Stewart, Gandolfo said, “I felt like I finally hit the big leagues” making goods that would be backed by a celebrity and by television advertising.

She said she put “blood, sweat and tears” into the brand and “nurtured” it as it came to Macy’s, working with what she deemed to be inexperienced designers at Martha Stewart and taking them on factory visits.

After a rocky start and a recession, the business began to pick up steam and became Macy’s biggest home brand.

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In December 2011, however, MSLO sold a 16.6 percent stake in its company to Penney’s and made a deal to set up a home shop-in-shop in the chain. Macy’s sued, and the matter is now the subject of a three-way bench trial in New York Supreme Court, where Gandolfo said Friday she was hit hard by the news that Martha Stewart cut a deal with Penney’s.

“I really put myself out there for these people,” she said. “Nobody told me to train their designers, nobody told me I had to take them to our factories. I trusted…the people I was working with [at Martha Stewart]. I was trying to help and felt like they stabbed me in the back.”

She later fired off an e-mail to colleagues saying, “It is my personal goal to show these traitors that we will not miss a beat in their business.”

Gandolfo said her team at Macy’s has been able to maintain a good working relationship with the designers at Martha Stewart, but noted that her counterparts became somewhat less helpful and were also working on ideas for Penney’s.

In a videotaped deposition shown in court, Steve Lawrence, former executive vice president and general merchandise manager of men’s at Penney’s, began to describe how the deal with Martha Stewart came together.

The issue of whether the brand’s contract with Macy’s would allow it to also be sold in Penney’s was a concern early on. He also noted, “We thought that Macy’s would probably drop [Martha Stewart] because we had seen them do that with other things [such as the Liz Claiborne brand].”

The court will finish hearing Lawrence’s deposition on Monday morning, after which Macy’s Terry Lundgren, president, chairman and chief executive officer, is scheduled to take the stand.