The 5 Dumbest Things on Wall Street This Week: Oct. 25
5. Martha's Almost Apology
Thank goodness Dumbest fans. Our long national nightmare is finally over and we can all get back to work.
No, we're not talking about the government reopening for business. That's old news by now. We're talking about the end of Martha Stewart's feud with Macy's (M) of course!
J.C. Penney (JCP) said it will no longer sell a slew of Stewart's home and bath products, yet will continue to sell a lesser amount of other Martha-brand items, including window treatments, rugs and party supplies. The struggling department store made the announcement in conjunction with Stewart Monday in order to avoid a potentially harsh ruling from a federal judge now deciding whether Stewart's agreement with former Penney's CEO Ron Johnson violated an exclusivity agreement she had with Macy's CEO Terry Lundgren. Penney said it will also return the 11 million shares of Martha Stewart Omnimedia (MSO) it purchased as part of the 2011 licensing deal, in addition to relinquishing two seats on Martha Stewart's board.Not that Martha's shares have been any boon to Penney's battered balance sheet since it inked the deal. After Penney's agreed to buy 11 million new shares at $3.50 each back on Dec. 7, 2011 -- yes, a date that will live in infamy for this and another less important reason -- Martha Stewart's stock leaped on the news, closing up 33% at $4.16. Since that day, however, shares of Martha's stock have fallen 44% to around $2.30. Penney's stock, meanwhile, is down around 80% to less than $7 since it shook hands with the devil . . . sorry, excuse our Faustian slip . . . the diva. "The Martha Stewart brand embodies quality, beauty, inspiration and possibility and we intend for Martha Stewart stores to be a key centerpiece of our new strategy to transform J.C. Penney into America's Favorite Store," gloated Ron Johnson at the time, believing full well he pulled a fast one over Lundgren. It's Lundgren getting the last laugh, however, and not just because the exceedingly arrogant Johnson was jettisoned from the CEO spot last April for a string of similarly brash and boneheaded decisions. Lundgren, who slammed the phone down when Martha informed him of her Penney's pact, can also smile at the sight of Martha owning up to her error. "We cleared up the issue. I hope this helps in the resolution of the lawsuit," said Stewart. OK. Stewart came close, but didn't exactly admit to messing up. Let's be honest though. She went to jail for less. Did you really think she would?
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