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JCP Allowed to Sell Some Martha Products for Now

Friday, 12 Apr 2013 | 12:00 PM ET
Macy's CEO on Resiliency of US Consumer
Terry Lundgren, chairman, president & CEO at Macy's, shares his thoughts on the company's ongoing legal battle with JC Penney, the state of consumer confidence, and the company's plans to hire around "a thousand college grads this year."

In the latest twist of the courtroom battle between Macy's, J.C. Penney and Martha Stewart's company, the judge says that J.C. Penney will be allowed for now to sell some Stewart products, for now. Still, Macy's CEO Terry Lundgren told CNBC he does plan to appeal if his company ultimately loses in court.

Macy's sued J.C. Penney and Martha Stewart Living Omnimedia after they announced plans in 2011 to open "Martha Stewart" stores within J.C. Penney's stores. On Friday, the judge involved in the case said J.C. Penney will be allowed to sell its non-branded Stewart-designed products (labeled "JCP Everyday") through the end of the trial until he makes his final decision.

But a previously existing preliminary injunction that prohibited the company from selling branded Stewart products in Macy's exclusive product categories, including bedding, tabletop, etc. still stands.

"It's disappointing that we're in this conversation, and we're doing so in court," said Lundgren, adding that he's never had to do this with any of his other vendor agreements.

Earlier on Friday, the judge made an interim ruling to dismiss Macy's claim of unfair competition against the rival department store. Macy's had claimed that Penney's had engaged in unfair competitive practices.

"We're simple trying to capture the spirit as well as the legal issues attached to our contract," Lundgren said. "We just are trying to enforce the contract that we think we have, and it's pretty straight forward as far as we are concerned. "

Martha Stewart's company and J.C. Penney agreed to sell certain home goods under a "JCP Everyday" label that would be designed by Stewart while Ron Johnson was CEO of Penney's. On Thursday, Stewart lost a bid to dismiss Macy's claim that it violated their contract by designing for J.C. Penney.

Earlier in the week, Johnson was ousted from J.C. Penney's chief position and replaced by Mike Ullman, who served in the role from 2005 to 2011.

Terry Lundgren
Getty Images
Terry Lundgren

When asked whether Lundgren would hire newly jobless Johnson, he said, "Ron's too expensive for me."

Lundgren said he doesn't need contracts with most of the company's vendors and suppliers.

"We shake their hand, we do a deal, we agree to something and it gets done," he added. "This is not that complicated."

He said they should be able to solve this dispute rather than being in court fighting it out. If Macy's does end up losing in court, Lundgren says the retailer plans to appeal because he's confident the company is in the right.

"If the lawyers are successful at twisting a word here or twisting a word there and capitalizing on little details that they can twist without addressing the spirit and the idea of the contract itself, well shame on them," he said.

-By CNBC's Katie Little; Follow her @katie_little_

Questions? Comments? Email us at consumernation@cnbc.com.

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