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
Feb 21, 2013 6:25PM
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I wouldn't buy anything from penneys,even if they get stewarts products of brand name,especially with the latest controversary about their endorsing the SNL anti christian,anti christ show and refusing to apologise for it or condemn the show on NBC.

I went to their store when they offered a reduced price on mens jeans,they were still $40.00,they never got any jeans at the reduced price.

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As I said before:  "He DOESN'T know JC Penney customers.  The Board needs to wake up.  If I wanted to pay for overpriced items with Martha's name on them, I'd go to Macy's.  Bring back the coupons & the customer service & we'll come back. Johnson needs to go back to the Hamptons.  We are more down to earth people who don't have to have name brands.
Feb 21, 2013 6:20PM
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JC Penney is not doing well because the CEO has no clue what customers want. He has run JC Penney into the ground and it is now one of the businesses that will not be in business very longer. Maybe it was bad before Mr. Johnson but it certainly is bad now and getting worse.  I cannot honestly say that I am not a fan of Martha Stewart and I cannot see where her merchandise has done very much for Macys. The same goes for Donald Trump. 

At this point in time I think the best thing the JC Penney's board can do is fire Mr. Johnson and get someone who know how to deal with retail.

I use to go to JC Penney and the stores were busy but now they are not busy at all.

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This dude is a giant tool. He took a good store that had amazing sales at xmas that drew in big bucks and now is going to kill it. then again that might be his plan: dump his stock in the company, drive it straight to hell and collect that big fat paycheck.
Feb 21, 2013 6:05PM
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can't believe this "MESS"  what a shame this lame brain has caused!!!!!!!!!!!

 

J C PENNEY has been the ultimate store since 1917!!!!!!!

 

PLEASE PLEASE Board do away with R. Johnson before its to LATE.

 

I will return to Pennys in a heartbeat, if goes back to being the real Pennys it use to be!!

Feb 21, 2013 5:36PM
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The CEO of JC Penny is brilliant.  Among a sea of idiots he is sure to be labled an idoit.  The only fault I can give Ron Johnson is for not simply accepting the fact that he is selling an idea to this sea of idiots.  Ron is trying to change JC Penny into a no nonsense retailer.  Do you really believe you are saving anything at all when you buy items on sale?  All the major retailers except for a few mark their items well beyond the actual suggested retail price and offer them for sale to con the buyer into believing they are getting a sale.  A no nonsense approach such as the one JC Penny is doing is to simply take away the con.  No sales, just mark the item up from the actual price they paid and sell it to the consumers at a profit.  Jon's failure to realize you can't teach old dogs new tricks is the only fault i see with him. 
Feb 21, 2013 5:32PM
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Too funny.  My recent experience at JCP is that its gotten cheap, cheap, cheap in the quality of their merchandise.  Now they want Martha to compromise her good quality so they can use her name to lure  customers?!  JCP, youre not on a good road.  Say bye-bye.
Feb 21, 2013 5:07PM
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Oh please everyone.....in the last quarter of 2012 JCP made a profit and the stock has held it's margin of over or around $19 a share when not long ago it was at $15 (I have been watching it for months).  Today it has gone up further.  Johnson keeps his job because he is making a profit for the company..............go check it out everyone.  Great prices, cheaper than anyone else on the block and everone is scared.   Check it out everyone......a whole range of price points.....better than Walmart and better than Target.
Feb 21, 2013 4:52PM
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The guy running Penneys now is a complete idiot,,,,,,I don't understand why the board has let him stay this long,,,,,,much longer and Penneys is done.
Feb 21, 2013 4:41PM
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How does Johnson manage to keep his job? Dose he have scandalous pictures of the board dressed up in those goofy hipster outfits that JCP is pushing these days?

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