JC Penney chief reveals dark side in Macy's lawsuit
Emails from CEO Ron Johnson show a Machiavellian streak in wooing Martha Stewart. Macy's should 'pick up their toys and go home,' he wrote.
In the first day of Macy's (M) courtroom fight against J.C. Penney (JCP), the real loser appears to be Penney CEO Ron Johnson.
Macy's is trying to show that Johnson (pictured), a former Apple (AAPL) executive, schemed to lure domestic diva Martha Stewart away from her long-standing merchandising deal with the department store.
Johnson's emails paint him as gloating over his score against Macy's, reports The New York Post. Macy's attorneys are trying to prove that Johnson had a scheme to trick Macy's CEO Terry Lundgren into dropping its Stewart products.
"We put Terry in a corner," Johnson wrote to Bill Ackman, a hedge-fund manager and a major shareholder of Penney's, the day after he announced a $200 million licensing deal with Stewart.
Johnson also appeared to exult over his department-store rival, writing in the same email, "Normally when that happens and you get someone on the defensive they make bad decisions." He added, "This is good."
In another email, he wrote that "the best way to stop Macy’s from renewing is to make our offensive so strong they simply pick up their toys and go home," according to The Dallas Morning News. When Johnson wrote that, Stewart's deal with Macy's was coming up for renewal, but Macy's didn't pack up its toys. Instead, it ended up renewing with Stewart through 2018.
Penney and Stewart attorneys countered by saying that Johnson's emails were pulled out of context, and argued in their opening arguments that Macy's contract allows for Penney to legally offer its "store-within-a-store" concept with Stewart's home products.
Macy's attorneys, meanwhile, allege that Johnson hunted down a copy of Stewart's confidential Macy's contract, despite advice that doing so was illegal, the Post notes.
So far, it seems Penney's deal with Martha Stewart Living Omnimedia (MSO) has brought more problems than profits.
Stewart reportedly is insisting that her products for Penney incorporate high-end materials, such as top-quality fabrics, leading some executives to worry the store will lose money on the goods.
Penney originally planned to sell Stewart's products on March 1, but has pushed that back to May 12.
| Tags: | Retail |
....his arrogance is unbridled........
He talks about making bad decisions - running Apple is nothing like Penney's. He's completely out of touch with the customer demograhics....and the GAY Dad's on the July 4th flier made me never to shop in their store ever.
He's ruined their brand name and reputation and they gave him a $54 Million dollar sign up bonus to ruin the corporation!!
Aero, Fitch, etc. really don't offer superior products, nor do they cost much more than Walmart when you get their items on sale, but teens LOVE seeing the $50+ price tags, because it's a status issue more than anything else and they're really none-the-wiser when mom/dad have a 50% off coupon.
JCP *used* to market to teens by competing somewhere between the higher end named brands in malls and the lower end crap in Walmart. Kids were happy because the price tag was on par with the mall merchandise and parents were happy because they were often paying prices that were competitive with Walmart.
Johnson, in effect, set up a pricing scheme to directly compete with Walmart, which was absolute lunacy. He drove the teens away because NO teen is buying a shirt that retails for $12 and he drove the moms/dads away, because they no longer feel like they're getting a deal (even if they're paying the same relative price....again, it's a psychology thing). The CEO is an idiot.
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