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.

By Aimee Picchi Feb 21, 2013 3:30PM

File photo of Ron Johnson, CEO of JC Penney, in Dallas on Sept. 10, 2012 ( Brandon Wade/Invision for JCPenny /AP Images)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. 


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Tags: Retail
33Comments
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And just to add salt to the wound; if he were let go, he'll more than likely walk away with a huge buyout/payoff. I guess he figures as long as HE's ok, everyone else can just choke on their unemployement checks.
Feb 22, 2013 7:20AM
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It is not easy for a man standing out to reveal any dark story!

Feb 22, 2013 6:08AM
Feb 22, 2013 6:01AM
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Why does Apple former executive run a retail chain?
Feb 22, 2013 2:00AM
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JCP was going down even before Mr. Johnson took over.  One of my family member worked there for 12 years but decided to leave after the store managers became controlling freaks.  In my opinion, people started to prefer Wal-Mart or Target.  I would shop at JCP but there is not a store close by where we re-located.  I would have to drive a fairly long distance to get to one so I have not shopped at JCP in the last year.
Feb 21, 2013 10:19PM
Feb 21, 2013 9:02PM
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Our family has shopped at Penny's for a long time. They had a really simple business model. The highest quality for the lowest price. You could pay more, but you were probably buying a name. You could pay less, but were most likely taking a cut in quality. JCP started losing their customer base when they tried to go upscale a few years back.
Feb 21, 2013 8:35PM
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This guy will be the end of JC Pennys
Feb 21, 2013 8:26PM
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Alls fair in love and retailing.  So what, catching a tiny percentage of any competitive market is big business.  This Penney guy seems to be soaking up all the publicity he can, bad publicity is good publicity sometimes.  Although he sure did crap out in the Ellen Degenerate deal... maybe... still a lot of publicity over that one. 
Feb 21, 2013 8:13PM
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I am fully convinced that the BoD at JC Penney smokes crack 24/7....There is no other logical explanation for them keeping Ron Johnson as CEO.
Feb 21, 2013 8:09PM
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Look...I can't believe you people.  JCPenney has not made a profit for years. You will see Ron Johnson will be a hero when his plan is fully implemented after four more years.  Alot of excitment and new lines of clothing is showing up in their stores. More new labels in the last year and coming year than in the past ten!  Figure out what a sale is...mark it up two and a half times and then throw a 50% off sale sign on it. Makes no sence how other retailers play mind games. But, you people thing you're getting a real deal because it says "sale" and a percentage off.  Just look at all the money JCP is saving money by not placing all those printed sale signs up, from paper, postage and salary cost. It's a no brainer!  Have you been in a JCP store lately?  Probably not. Don't speak unless you have.  The people who are whining are those that abused the coupons and wanted everything for free. No company can survive with those losers. Best Buy is going through the same problem. Losers that go sightseeing/shopping at Best Buy, and then make their purchase off the internet.  You people!!!  Give the guy a chance, you will see a noticeable difference in the coiming year and near future.
Feb 21, 2013 7:49PM
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....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!!

Feb 21, 2013 7:39PM
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Without a doubt Johnson is the biggest A hole I have ever seen in management for the past ten years.   When is J C Penny's board going to wake up and dump this guy.   Sad.  He is such an

egomaniac. 

Feb 21, 2013 7:02PM
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The person running Penny's has a third grade mentality.
Feb 21, 2013 6:59PM
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We all now know who will have the monopoly on the new US Postal Service fashion line.  
Feb 21, 2013 6:49PM
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say good bye to penny's idiot gots to go !!!!   take jcpenny back to the way it was , but it's to late :(
Feb 21, 2013 6:33PM
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@Smiley290 - Since replying seems disabled.....You do understand the psychology behind "sales", right?  Do you think teenagers (the driving force behind apparel) really want to see Walmart prices advertised openly?  Do you think JCP can compete with Walmart?

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. 

Feb 21, 2013 6:28PM
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I will never go back to J.C.Penney's,they suck.\,and so does johnson.
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