Will Martha Stewart's pricey taste hurt JC Penney?

The domestic diva is reportedly insisting on high-end materials for her line of home products, raising profit concerns for the struggling retailer.

By Aimee Picchi Feb 18, 2013 11:15AM

Customer Service counter at the J.C. Penney store in Westminster, Colorado on February 20, 2009 (RICK WILKING/Newscom/RTR)Martha Stewart is known for her high-end tastes, blogging to her fans about the pleasures of "thick and fluffy Turkish towels" and "finely ironed linens."


But her passions are on a collision course with retailer J.C. Penney's (JCP) need to turn a profit, reports The New York Post


At issue is a deal Penney struck with Martha Stewart Living Omnimedia (MSO) to sell household products branded with Stewart's name, as part of the retailer's strategy to lure new shoppers. 


Stewart is insisting that her products for J.C. Penney incorporate high-end materials -- such as top-quality fabrics and packaging components -- leading to concerns among its executives that the retailer will lose money on the goods, the Post notes.


Despite those fears, J.C. Penney CEO Ron Johnson is backing Stewart, according to the report. As a result, the new products' costs have jumped as much as 30% above their replacements. 


The report comes at a delicate time for Penney: A lawsuit brought by Macy's (M) against Martha Stewart Living Omnimedia over its deal with J.C. Penney is set to go to trial on Wednesday, according to Reuters


At J.C. Penney, Stewart's name will appear on rugs, window coverings, as well as Martha Stewart Pantry, a line of food mixes, and Martha Stewart Celebration, which are paper party products, according to The Dallas Morning News. The retailer will also sell a private label called Everyday, ranging from linens to furniture, that will be designed by Stewart's company. 


While Penney originally hoped to sell Stewart's products on March 1, that's been delayed until Mother's Day, or May 12, Home Textiles Today notes.


According to the Post, Stewart insisted her cutlery include high-grade stainless steel, and demanded that the glassware come from Europe instead of China. J.C. Penney's won one battle, when executives vetoed fabric from a supplier to Frette, whose Egyptian cotton bedsheet sets can cost over $1,000


With most U.S. consumers struggling with smaller paychecks as higher payroll taxes took effect in January, the big question for J.C. Penney is whether its customers will pay up for Martha Stewart quality. 


More on moneyNOW

Tags: Retail
244Comments
Feb 18, 2013 6:06PM
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It isn't as bad as Sears adding the Kardashian's line. gross.
Feb 18, 2013 5:56PM
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In our economy-driven world, we will "pay up" for Martha's goods when they go to the sale, mark-down or clearance table -- Sorry, if one can't see what's down this pike, they need another job!

Feb 18, 2013 5:51PM
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Amazon.com will eventually drive most of these brick and mortar chain stores out of business. I know I can save money but I refuse to shop online on Amazon. The only way I shop online is with a specific retailers website.
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Sounds like Martha could be the loser all around with what is happening here. Don't think the Consumer cares about Martha anymore anyway.  
Feb 18, 2013 5:49PM
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didnt she have a line at Kmart? How did that work out for them?
Feb 18, 2013 5:48PM
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You think she would have learned to scale down while she was in prison!

Feb 18, 2013 5:48PM
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They want their customers back, then they should dump the CEO who keeps making decisions that are turning off their customers.
Feb 18, 2013 5:47PM
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I just don't understand the popularity of this woman.  I've never warmed up to her. 
Feb 18, 2013 5:44PM
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I stopped buying from JCP almost 10 years ago.  The quality of their clothing and their home furnishings (sheets, towels, table cloths) is so awful that there is nothing they have that I will buy. 

 

JCPenney (and Sears) was always known for their quality merchandise at reasonable prices.  You didn't have to spend $200 to get a decent set of sheets.  I loved their percale sheet sets and would buy at least 3 sets a year for myself and a couple for gifts.  Now everything is inexpensive, but it is cheaply made and it shows.  Their high thread count sheets do nothing but wrinkle and are not logical for a family with kids.

 

I would be grateful for Martha's stuff.  It has to be better than what they have now.  It distresses me that Target & Kmart have better quality clothing than JCPenney.

Feb 18, 2013 5:40PM
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Why am I not suprised CEO Ron Johnson supports carrying Stewart high end products that probably won't sell. I now believe it's intentional. Nobody could make as many bad descisons as this clown and it not be intentional. This incompentent JCP killer can now add this manuver to the long  list of management descisions that have led JCP to bankruptcy and total self destruction. What's amazing is that the JCP board has sat idly by and let this jerk destroy this old respected American retail chain without a peep. They continue to support every fatal move Johnson makes. How many millions have they  paid Johnson this month?
Feb 18, 2013 5:40PM
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I try to avoid buying anything, especially cookware, with some famous person's name on it, especially when it is a wealthy known crook.  It's usually expensive, over priced crap.

Feb 18, 2013 5:39PM
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Martha Stewart should have been given the death penalty for her insider trading, back stabbing sense of competition and general snobbery. JCP has a branded name and good locations, they don't need MS.
Feb 18, 2013 5:37PM
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Another gay rep. for JCP. What are they thinking? Boycott JCP!

Feb 18, 2013 5:36PM
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Get rid of Martha.....because of her, there aren't choices.  Why does everything we buy have to have her name on it?  It just pushes up the prices.....I say get rid of ALL these stupid celebrities having their names on everything. 

Feb 18, 2013 5:34PM
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I like the Martha Stewart "look", but the quality of some of her lines hasn't always been there.  When she first aligned with K-mart over ten years ago, I bought a set of Martha Stewart sheets; they came out of the first wash completely unravelled and frayed.  I had the same experience with a Jacklyn Smith sheet/comforter set.  The quality just isn't there in some of those products.  I'd just as soon shop at Big Lot's these days.  I don't expect stuff like that to last forever, especially at such moderate prices, but I do want to get a few washings out of it.  Then I can get something new. 
Feb 18, 2013 5:31PM
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I use to be a J.C.'s shopper but no more. Seven years ago you could shope there store and find decent women's clothing, not anymore. Since they redid there stores I find there tops are no more than  gauze cloth, everything they sell now looks cheap and tastless..
Feb 18, 2013 5:30PM
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I love JC Penney's and purchased quite a lot of my linen & bath towels from the chain.  Plus, my disproportionate size can be well dressed for Sunday Services.  However, Martha Stewart pricey products will put an end to my JCP days.   
Feb 18, 2013 5:30PM
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JCP is a standing joke in the marketing community.  I think when your down to mainly just the friends of Ellen DeGeneres shopping there school is pretty much OUT.
Feb 18, 2013 5:28PM
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Martha Stewart? Was she that lady who went to prison for like running a brothel?
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