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. 


More on moneyNOW

Tags: Retail
33Comments
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?

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 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.
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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 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 7:02PM
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The person running Penny's has a third grade mentality.
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 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 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.

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.
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 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 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 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 8:35PM
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This guy will be the end of JC Pennys
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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 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.
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