Macy’s CEO takes stand in Macy’s-Martha Stewart case
New York — Terry Lundgren, CEO of Macy’s, took the stand on Monday to testify in the trial of two Macy’s lawsuits regarding the deal between J.C. Penney Co. and Martha Stewart Living Omnimedia Inc. The long-awaited trial began last Wednesday, in New York Supreme Court.
The trial is about whether Macy’s has the exclusive right to sell Martha Stewart branded cookware, bedding and certain other products.
Testifying, Lundgren said he was shocked when Martha Stewart, who at the time he considered a friend, called to tell him about her arrangement with J.C. Penney.
"I was completely shocked and blown away," Lundgren said. "I was literally sick to my stomach."
Under oath, Lundgren said Macy’s had built the Martha Stewart brand to be the biggest in its home business. He noted that the department store company has spent 40% of its overall marketing on the Martha Stewart brand even though the home category represents 17% of sales.
"This is an extremely important brand and we are going to continue to highlight the brand in our stores," Lundgren said on the stand.
Lundgren said J.C. Penney having access to the brand will not be good for the business and will confuse shoppers.
Macy’s sued Martha Stewart Living in January 2011, when the company signed a deal with Penney, which took a 17% in the brand. Macy’s alleges Martha Stewart Living breached a long-standing contract in entering into the J.C. Penney deal.
In a separate lawsuit, Macy’s sued Penney. Macy’s argued that the chain had no regard for the Macy’s contract and that CEO Ron Johnson had set out to steal the business. The two suits were consolidated for the current trial.
According to the AP, the crux of the issue apparently lies in a provision with Martha Stewart Living’s agreement with Macy’s that allows Martha Stewart to sell goods in categories like bedding in Martha Stewart Living’s own stores. Since the Macy’s agreement doesn’t say the goods can be sold "only in "stand-alone" stores, according to Martha Stewart Living, the branded Martha Stewart in-store shops in J.C. Penney stores do not fall under the exclusive agreement.
But as outlined in documents, Macy’s attorneys claim that it later found that J.C. Penney "knowingly and purposely demanded and received confidential information" from Martha Stewart Living about the contract of Macy’s and crafted a deal that was more lucrative than the Macy’s agreement.
J.C. Penney CEO Ron Johnson is scheduled to take the stand on Friday.
Kantar: Overall branded basket 4% less expensive at Walmart than Target
New York — With an overall branded basket 4% less expensive than Target’s, Walmart assumes the strongest overall lead in Kantar Retail’s semi-annual pricing study since the study began in 2009.
While strategic price discounts on key items continue to be a cornerstone of Target’s price competitiveness, rather than everyday low prices, Target’s overall basket has not been lower than Walmart’s since the January 2011 iteration of this study.
Kantar Retail revisited the same co-located Walmart and Target stores in Massachusetts in January 2013 to re-assess a previously established basket of national brand items including edible grocery, non-edible grocery, and health & beauty aids (HBA) items. Only identical SKUs from both retailers were assessed.
“While the two retailers’ baskets are still closely priced, Walmart has managed a consistent lead since early 2011,” comments Leon Nicholas, SVP with Kantar Retail and contributor to the study. “Its positioning is underpinned by management’s revived focus on EDLP.”
In contrast, Nicholas said, Target offers its best prices for guests willing to commit to value in the longer term by stocking-up, realizing gift card values on a return trip, and signing up for its REDcard (Target’s loyalty program).
“This price separation is a key strategic piece of Walmart’s efforts to shore up shopper traffic and drive its ‘save money’ brand proposition,” Nicholas noted.
Other highlights of the study include:
- Walmart’s edible grocery basket was 14.1% less expensive than Target’s, the strongest recorded price gap in the history of this study. While Walmart’s HBA basket retained its 4% price gap, Walmart’s edible grocery basket substantially reversed its position since the June 2012 assessment.
- On an individual item basis, Walmart’s basket widened the spread. Nearly one-third of the items were more than 10% less expensive at Walmart, the largest proportion of Walmart’s basket items to assert a 10% spread over Target’s since this study began.
- Walmart achieved its basket position without rollbacks. Walmart’s basket recorded no price promotions in this iteration while Target posted a total of seven temporary price cuts (TPCs). Strategic price discounts on key items continue to be a cornerstone of Target’s price competitiveness, rather than every day low prices.
- Target’s overall private label basket was 12.2% more expensive than Walmart’s. Walmart continues to hold a competitive private label basket, as it was the same price or cheaper than Target’s across all of the study’s iterations since 2009.
- With 5% Rewards, Target’s basket would have been 1.1% less expensive than Walmart’s. Though Walmart’s total basket was less expensive than Target’s. Target continues to offer a very competitive basket price to its REDcard holders.
Estee Lauder CEO named to Francesca’s board
HOUSTON, — Apparel and accessories retailer Francesca’s Holdings has namedRichardKunes as an independent director to its board of directors, effectiveFeb. 25, 2013.
Since August 2012, Kunes hasserved as EVP and senior advisor to the CEO at TheEstee Lauder Companies, Inc. Prior to that, he served for 12 years asEVP and CFO. Before beingappointed CFO, Kunes served in several financial managementpositions at Estee Lauder including corporate controller.
Before joining Estee Lauder in 1986, Kunes spent 11 years with theColgate-Palmolive Company in a variety of financial managementpositions. Kunes holds an MBA in International Finance from PaceUniversity.
Greg Brenneman, chairman of the board, said, "We are very excited towelcome Rick to our Board. As a highly accomplished finance executive,Rick brings a wealth of financial, strategic and operational leadershipexperience, enhancing the board’s ability to continue to successfullyguide francesca’s industry-leading business growth."