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Martha Stewart Forging Ahead With J.C. Penney

Martha Stewart Living Omnimedia has amended its agreement with the department store and will receive about $288 million over the course of the 10-year deal.

Martha Stewart is moving full-steam ahead on its partnership with J.C. Penney Co. Inc., despite its legal wrangling with Macy’s Inc.

On its earnings call Monday morning, Martha Stewart Living Omnimedia said “nothing has changed” since it lost a preliminary injunction to Macy’s earlier this month, and that it still plans to launch its products in-store and online with J.C. Penney in the first quarter of 2013.

The firm said it has amended its agreement and will now receive a minimum of about $288 million over the course of the 10-year deal with J.C. Penney, up from $178 million. This increase, however, “is not directly affected by the ruling.”

Macy’s declined to comment.

In December, the media company inked a deal with Penney’s to sell its wares starting in 2013, even though it had an existing deal with Macy’s to sell exclusive Martha Stewart-branded products. Macy’s, which claims its agreement with Martha Stewart doesn’t expire until 2018, sued its partner for breach of contract in January.

Fast-forward to July when a New York state judge sided with Macy’s and granted it a preliminary injunction, which would bar Martha Stewart from selling branded bedding, bath, kitchen textiles, dinnerware and cookware in Penney’s stores.

“This case is primarily a contract dispute over how certain products are branded and sold, not about the validity of the partnership with J.C. Penney,” Martha Stewart president and chief executive officer Lisa Gersh noted on Monday’s earnings call. “We are planning to be in J.C. Penney stores with a wide array of products for consumers early next year, and we’re in ongoing development of categories and products, as we typically are, with all of our partners.”

When asked to clarify how the ruling impacts her company, Gersh said the judge’s ruling was “not a final ruling,” and that the specific terms of the ruling have yet to be determined.

“We expect that to happen shortly, but we have not had an order settled by the judge yet,” she said.

Although the ruling is a preliminary one, it is still a blow to Martha Stewart, as it indicates that the judge believes harm has been done to Macy’s. The judge will make his final decision after the trial, which could begin as early as November.