Shares of Martha Stewart Living Omnimedia Inc. dropped 5.7 percent to $2.32 Thursday as investors worried over the company’s relationship with J.C. Penney Co. Inc.
The New York Post reported that Penney’s chief executive officer Myron “Mike” Ullman 3rd was going to drop the retailer’s line of Martha Stewart home goods. The 2011 deal that created the collection is now the subject of a battle in New York Supreme Court with Macy’s Inc., which already had an agreement with the brand.
But a Penney’s spokeswoman said, “With regard to the product categories at issue in the lawsuit, the company is awaiting the judge’s ruling and we are not commenting any further.”
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Penney’s former ceo Ron Johnson negotiated with Stewart to create the controversial line and also spent $38.5 million for a 16.6 percent stake in the home goods firm.
A Martha Stewart spokeswoman noted that: “J.C. Penney remains one of our many retail partners. Our agreement with them is in force, and we have no intention of ending it.”
A source at Penney’s said a lot was going to depend on how the judge rules.
In the meantime, the retailer is making some adjustments in the home area, which was recently revamped but flopped with consumers.
“Things have to earn their space in the home department and the way it currently stands, Martha has a lot of space with lower-dollar items like paper products,” the source said, noting some of the brand’s offerings might deserve more space, such as window coverings.
Shares of Penney’s gained 5.3 percent to $14.22 Wednesday.