By  on February 28, 2013

NEW YORK — After a lifetime in the fashion industry, Robin Marino was caught off guard when she found out in December 2011 that Martha Stewart Living Omnimedia Inc. had cut a deal to sell home goods through J.C. Penney Co. Inc.

First, she was surprised none of her friends had leaked word of the deal to her — and she no doubt has lots of friends who could have, since she was an executive at Martha Stewart for six years and eventually ascended to co-chief executive officer overseeing the company’s merchandising operations.

RELATED STORY: Macy's Exec Talks Martha Stewart on Stand >>

But Marino was also surprised, because she didn’t think Martha Stewart’s similar agreement with Macy’s Inc. — a deal she conceived of and helped negotiate and execute — would allow it.

That’s certainly the position of Macy’s, which sued Stewart last year, ultimately bringing the three parties to New York Supreme Court, where Marino, now group president at Li & Fung, was testifying.

Marino first started to talk about joining Martha Stewart when the home maven was serving a prison term for obstruction of justice. “My perception going in was that the business was going to be very challenged as a result of Martha’s incarceration,” Marino said.

Kmart — which sold Martha Stewart home goods at the time — was also going through a difficult transition under the guidance of hedge fund operator Edward S. Lampert, she said. “I believe that we needed to diversify the business because we had all of our eggs in one basket,” Marino said. And the company’s deal with Kmart wouldn’t let them take the brand to another discount player such as Target Corp. or Wal-Mart Stores Inc.

So Marino approached Macy’s. “I felt that we needed to take Martha Stewart upmarket,” she said.

The question of exclusivity came up frequently in Marino’s negotiations with Macy’s and was an important point for the department store. Marino said it was her goal that the Martha Stewart brand take over more of Macy’s home business and that she believed the brand would be aggressively promoted and advertised.

Macy’s has been accused in the case of not doing all it could to grow the Martha Stewart business.

Martha Stewart has maintained that it was within its rights to sign its deal with Penney’s because it’s setting up shops-in-shop with the chain. Under the agreement with Macy’s, Martha Stewart is permitted its own branded shops.

The trial continues today with Penney’s ceo Ron Johnson taking the stand.

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