This Day On The Street
Continue to site
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

The Deal: Martha Stewart Surges on Macy's Settlement

NEW YORK (TheStreet) -- Martha Stewart Living Omnimedia, Inc. (MSO - Get Report) was climbing Thursday as the home products maker said it settled a lawsuit with Macy's, Inc. (M - Get Report) over their products deal with J.C. Penney Co. (JCP - Get Report).

Neither side disclosed details of the settlement, saying only that they were glad "to put this matter behind us." Neither Martha Stewart or Macy's expect the settlement to impact earnings.

Martha Stewart was surging 11% to $4.66 while Macy's was slipping 0.1% to $53.34. J.C. Penney was losing 2.8% to $8.89.

Last year, Macy's filed a lawsuit against both Martha Stewart and J.C. Penney over a partnership allowing J.C. Penney to sell Martha Stewart-branded products. Cincinnati-based Macy's claimed it reached an exclusive agreement with Stewart a few years ago.

Earlier this year, a New York state judge ruled that J.C. Penney could sell products made by Stewart's company, but not those with her brand on it. Macy's made plans to appeal that ruling.

Must Read: Judged Slams NSA's Verizon Records Dragnet as 'Unconstitutional'

In October, Stewart and J.C. Penney revised their product agreement, allowing J.C. Penney to continue to sell Martha Stewart products, including rugs, window treatments and seasonal holiday items. As a result of that new deal, Stewart will receive an undisclosed amount of design fees and royalty payments, as well as 11 million shares of common stock that J.C. Penney owns in Stewart's company.

J.C. Penney has also agreed to pull its representation off of Martha Stewart's board.

Plano, Texas-based J.C. Penney acquired its 11 million shares in Martha Stewart, which represents a nearly 16% stake, in December 2011, in exchange for a $38.5 million cash infusion.

The announcement is the little good news that J.C. Penney has received lately. For the quarter ended Nov. 2, J.C. Penney reported a 5.1% drop in its revenue, to $2.78 billion from $2.93 billion. The company's balance remains under pressure, and J.C. Penney still burns through cash quickly, going through $2.5 billion to $3 billion in the first three quarters of 2013.

In August, J.C. Penney adopted a poison pill to protect itself from any hostile takeovers, but noted that the move was not in response to any particular takeover attempts.

Earlier this year, J.C. Penney hired Blackstone Group (BX) for financial advice, and industry watchers said at the time that the company could be targeted by private equity firms.

Martha Stewart's shares opened 3.5% higher, to $4.35, on Thursday morning, giving a market capitalization of $406 million.

J.C. Penney's stock opened 1% lower, to $9, with its market cap near $2.7 billion.

By Demitri Diakantonis in New York.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

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
Stocks Under $10

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

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

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
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
MSO $0.00 0.00%
JCP $6.95 -0.57%
M $39.23 3.50%
AAPL $93.79 0.10%
FB $101.98 0.07%


Chart of I:DJI
DOW 15,973.84 +313.66 2.00%
S&P 500 1,864.78 +35.70 1.95%
NASDAQ 4,337.5120 +70.6750 1.66%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs