Martha Stewart Testifies About J.C. Penney Deal

Martha Stewart took the stand Tuesday in a lawsuit that involves her company Martha Stewart Living Omnimedia, Macy's and J.C. Penney Co. Macy's is suing J.C. Penney and Stewart's company for breach of contract.

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Nine years after her conviction relating to a stock sale, Martha Stewart found herself back in court yesterday. She testified in New York State court, defendeding her company's deal with JCPenney to sell housewares, despite an exclusive contract with Macy's.

NPR's Dan Bobkoff reports.

DAN BOBKOFF, BYLINE: This case comes down to questions like, what exactly is a store. Back in 2011, Martha Stewart and JCPenney announced they would open Martha Stewart-branded stores within stores, as in inside a JCPenney. There was a problem. Macy's had an exclusive deal with Stewart's company to sell certain home goods, like bedding. It was a big selling point.

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UNIDENTIFIED WOMAN: The new Martha Stewart collection. Only at Macy's.

BOBKOFF: Once Macy's found out about the JCPenney deal with Martha Stewart Living Omnimedia, Macy's sued both of them. Stewart's lawyers say the contract allowed her company to open its own stores, and that's the store within a store argument.

In about three hours of testimony, Stewart looked relaxed, but serious. She said this not personal. It's a contract dispute. It boggles her mind, she said, that they're in court. And, she said she was flabbergasted when Macy's CEO hung up on her before she could explain the JCPenney deal. She testified that Macy's didn't live up to its end of the bargain either. She thought it could have done more to boost sales of her products.

Debra Mednick, an industry analyst with NPD Group, says for companies like department stores, big names are a big deal.

DEBRA MEDNICK: Celebrities in general are still very important to the house wares industry. They help to bring relevancy.

BOBKOFF: Both JCPenney and Martha Stewart's company have had tough times of late. Stewart said on the stand, that JCPenney's plans for a radical makeover were what drew to her the chain, but she conceded she doesn't know if that transformation will work out in the end. On the stand yesterday, she said, it certainly hasn't worked in the last few months.

It's up to the judge whether these two struggling brands will be allowed to go forward with their plans.

Dan Bobkoff, NPR News, New York.

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