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Martha Stewart denies wrongdoing in Penney deal

Domestic diva Martha Stewart took the stand in

Domestic diva Martha Stewart took the stand in State Supreme Court in Manhattan on March 5, 2013. She is at the center of a bitter legal battle between two of the nation’s largest retailers — Macy’s Inc. and J.C. Penney Co. (Oct. 28, 2008) Photo Credit: AP

Home products diva Martha Stewart testified in court Tuesday that she did nothing wrong when she signed an agreement to open up shops within most of J.C. Penney's stores across the country.

Stewart testified in New York State Supreme Court in Manhattan as part of a legal battle over whether the company that she founded breached its contract to sell cookware, bedding and other items exclusively at Macy's when she inked the deal with Penney in 2011.

Stewart, who founded Martha Stewart Living Omnimedia Inc., denied during three hours of testimony Macy's allegations that she did anything unethical in brokering the deal with Penney. She said that she was only looking to expand and offer new opportunities for shoppers.

In fact, Stewart said it's Macy's that didn't uphold its end of the agreement to try to maximize the potential of her business. She said her brand, which is about a $300-million business at Macy's, has grown "static" at the department store chain. She said she was hoping the business would exceed well over $400 million.

"We were disappointed," Stewart testified. "We did have hopes that the business would be much bigger . . . We got to a certain dollar amount and struggled and never got any further." The trial, which began Feb. 20, focuses on whether Macy's has the exclusive right to sell some Martha Stewart branded products such as cookware, bedding and bath items.

Penney signed a pact in December 2011 with Martha Stewart Living to open shops at most of its 1,100 stores by this spring. But one month later, Macy's renewed its long-standing exclusive deal until 2018 and sued Martha Stewart Living and Penney.

Martha Stewart and Penney are using what they believe is a loophole in the agreement between Macy's and Martha Stewart to move forward with the deal. It's a provision that allows Martha Stewart to sell goods in categories like bedding in Martha Stewart stores.

According to her lawyers, because the Macy's agreement doesn't specify they have to be "stand alone" stores, the mini shops within Penney stores do not fall under the exclusive deal. Moreover, Stewart said in court Tuesday, "I don't think you need walls to be a store."

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