Nine years after being sentenced to prison for lying about a stock sale, Ms. Stewart took the stand on Tuesday in New York State Supreme Court in a very different trial, this one concerning which retailers have the right to sell her sheets, towels and other home goods.
Ms. Stewart, who never testified in her insider trading trial, seemed at ease on the stand. She presented cool, crisp testimony meant to support her attempt to sell her home merchandise not just through Macy’s, with which she has an exclusive contract in some categories, but also through its rival J. C. Penney.
Ms. Stewart stayed on point and reinforced her brand during her four-hour testimony. Discussing her deal to sell goods at Kmart, starting in 1997, she said, “I paid the price for going mass very early on: the garden club of Greenwich canceled my speaking engagement.”
She added, “That was a very difficult deal for me to sign — I lived in a pretty house with a pretty garden; I wrote about upscale things.”
But, she said, the home products for the less affluent at the time were unappealing. “They were buying polyester; they were buying designs that were really, really sad,” she said. She recalled critics telling her, “Oh, poor people don’t do their laundry as often as rich people, so they don’t want light colors,” but the top-selling towel color her first year at Kmart was white.
The proceedings were part of lawsuits first brought by Macy’s in 2012 against Martha Stewart Living Omnimedia and J. C. Penney. The main allegation is that Ms. Stewart’s company violated a contract with Macy’s when it agreed to provide similar merchandise to Penney’s.
Despite the declining financial picture at her company, which reported last month that it had lost $56 million in 2012 as revenue fell, Ms. Stewart seemed confident.
“Why do you think the headlines are pitting me against J. C. Penney’s and Macy’s?” she asked. “They’re fighting over something, and it’s not just home. It is our amazing product.”
She touched briefly on her time in prison. In 2003, Ms. Stewart was indicted on charges of securities fraud and obstruction of justice having to do with insider trading of shares in the drug maker ImClone. A trial followed in 2004, and in October of that year, she went to prison for a five-month term.
“I had a terrible time personally, and that could have taken down the company; it did not. It could’ve taken down the brand; it did not,” Ms. Stewart said on Tuesday. “But I must tell you that rebuilding is a lot harder than building.”
In 2006, as Macy’s considered doing business with Ms. Stewart, it had a public relations firm research her reputation. “Lots of people don’t like her, but they like her products and will happily buy them from Macy’s,” the retailer’s chief executive, Terry J. Lundgren, wrote to other executives.
Macy’s began selling Martha Stewart products in 2007; at the end of 2009, when her contract with Kmart expired, it was the only retailer to sell her products in categories like home décor, bedding and bath.
Until Penney’s came along. As part of an ambitious — and, so far, faltering — plan to turn the retailer around, its newly appointed chief executive, Ron Johnson, decided in 2011 to woo Ms. Stewart and devote big sections of Penney’s stores to her product.
Ms. Stewart testified that she was “flabbergasted” by Mr. Lundgren’s reaction when she tried to tell him about the Penney’s deal in a phone call.
“I don’t know if I got through even half the points before he hung up,” she said.
Ms. Stewart said on Tuesday that she was “disappointed” with parts of the Macy’s relationship: she had expected her products to sell $400 million a year there, and they are only selling $300 million. “They have really kept us, I think, pretty static, where we could’ve been bigger,” she said.
She seemed sporting about the media attention — during a break, she took pictures of the courtroom with a small camera — but her comments about how this lawsuit had blown up recalled remarks from nine years ago.
“I’ve spent the entire episode of this lawsuit wondering what — it’s a contract dispute, an understanding of what’s written on the page,” Ms. Stewart said on Tuesday. “It just boggles my mind that we’re here sitting in front of you, judge. It’s a real problem for a company like ours.”
In 2004, while she did not testify, she read a statement before the judge that similarly deplored the frenzy. “A small personal matter” became “an almost fatal circus event of unprecedented proportions,” she said then.
During questioning from a Macy’s lawyer, Theodore M. Grossman, on Tuesday, Ms. Stewart often spoke over him as she looked into the middle distance. Mr. Grossman, trying to make a point that competition from another store could reduce demand for Martha Stewart products at Macy’s, displayed a picture of a casserole dish on a video screen and asked whether someone who bought a Dutch oven at one store would be less likely to go to the other end of the mall and buy another Dutch oven.
“No,” Ms. Stewart said.
Mr. Grossman posed a similar question, this time using a knife set. Ms. Stewart first said that shoppers, with access to smartphones, QR codes and Amazon, are “really going to buy that knife set where they feel comfortable shopping, where the price is the best and where they feel they’re getting the very best quality.”
When Mr. Grossman rephrased the question, Ms. Stewart remained firm. “They might have two houses,” she said. “They might have two kitchens.”
With a lawyer for her company, Eric Seiler, Ms. Stewart was more relaxed.
Mr. Seiler, trying to indicate how Ms. Stewart split her day between the publishing and merchandising divisions of her company, asked her, “How do you do your time?”
“I did my time,” she replied, as the courtroom broke into laughter.
Article source: http://www.nytimes.com/2013/03/06/business/contract-dispute-brings-martha-stewart-back-to-court.html?partner=rss&emc=rss
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