This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

The Five Dumbest Things on Wall Street This Week: March 1

Stocks in this article: MSO LYV AH VVUS AVID

2.) Martha's Devilish Deal

Martha Stewart was back in court this week. Need we say more Dumbest fans?

Okay. We'll say a little bit more. It's simply too tough for us not to comment on a case this monumentally idiotic.

Macy's (M) Chief Executive Terry Lundgren testified on Monday that he was so disgusted after Stewart informed him of her deal to sell her wares at rival J.C. Penney (JCP) back in December 2011 that he hung up the phone and has not exchanged words with the domestic diva since. Macy's, which signed its deal with Stewart following her release from prison in 2005, sued Martha Stewart Living Omnimedia (MSO) in January 2012 for breach of contract, claiming it has the exclusive right to sell her products in product categories like cookware and bedding. Macy's later sued J.C. Penney as well, and the two cases were consolidated in this week's non-jury trial in Manhattan.

J.C. Penney announced on December 7, 2011 - Pearl Harbor Day mind you - its plan to launch Martha Stewart boutiques in more than 700 of its stores in 2013 as a part of CEO Ron Johnson's grand turnaround strategy. As a kicker to the deal, Penney's purchased 17% of Martha Stewart Living Omnimedia for $38.5 million.

"I was completely shocked and blown away," said Lundgren Monday. "I was literally sick to my stomach."

And you rightfully should have been Terry. You singlehandedly rehabilitated Martha's brand following her obstruction of justice conviction, and this is how she pays you back?

Heck, she might as well have taken a homemade shiv to your back big guy. That's probably what she would have done when she was a guest of the government in Alderson West Virginia anyway.

A stone-cold Stewart told Lundgren that the J.C. Penney deal would be good for Macy's, according to Lundgren's testimony. And that's when he hung up on her.

"The thought this was going to be good for Macy's was so far from anything I could comprehend," said Lundgren.

If it's any consolation to you, we can't fathom it either Terry old boy. Then again, the ultimate judge - that stock market that is - seems to be on your side in the wake of Martha and Ron's Faustian bargain. A quick look at this week's earnings results clearly illustrates the downside of their devilish deal.

Macy's reported a fourth-quarter profit that beat Wall Street expectations Tuesday, sending its shares up 3%. Meanwhile, MSO stock sank over 5% on that same day after it reported a 74% drop in 4th quarter net income as a result of weak ad sales. The conclusion of "The Martha Stewart Show" in mid-2012 certainly wasn't "a good thing" for its broadcast division either.

As for Penney's, well, Ron Johnson's demolition project reported another massively ugly quarter Wednesday with an adjusted net loss of $427 million, or $1.95 per share. On the top-line, the once-iconic retailer posted 30% plunge in revenue, proving once and for all that Martha hitched her wagon to the wrong star.

Looking back a little further, shares of Macy's have risen 7% over the past year compared with a 57% drop in Penney's shares and a 40% tumble in MSO stock.

Sometimes karma can be a real kick in the ass. Can't it Martha?

4 of 5

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,030.21 +6.04 0.03%
S&P 500 2,081.88 -0.29 -0.01%
NASDAQ 4,773.4720 +8.0480 0.17%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs