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Common Sense: The Headache in Housewares for J.C. Penney

March 8, 2013 by Leave a Comment

Yet that didn’t stop him from signing a deal with Martha Stewart — his “new best friend,” according to an e-mail — even though she already had an exclusive deal with Macy’s. “Macy’s deal is key. We need to find a way to break the renewal right in spring 2013,” he wrote in one message. “The ball is in her court now to talk to Macy’s about a break in a tight, exclusive agreement they have with her,” he said in another.

The e-mails emerged this week in a New York courtroom, where Macy’s has accused J. C. Penney of inducing Martha Stewart to breach her contract and is trying to block its rival from carrying out its plan to open Martha Stewart boutiques inside J. C. Penney stores.

J. C. Penney has been floundering — it recently reported a staggering $4.28 billion loss in sales for the year since Mr. Johnson became chief executive and announced the layoff of 2,200 workers this week. Its shares have dropped more than 60 percent. So the star-crossed Martha Stewart deal may not be its biggest problem.

But it’s a purely self-inflicted one. With calls mounting for Mr. Johnson’s ouster, the deal is also a window into his judgment, experience and management skills.

“I’m very concerned that this could be a fatal blow to J. C. Penney,” said Walter Loeb, a veteran retail analyst, referring to the lawsuit. That Mr. Johnson “would talk about ‘breaking’ a deal between Martha Stewart and Macy’s is simply incredible. Ron Johnson has never been a chief executive, and I can only assume this reflects his naïveté and lack of experience.”

Much of the coverage of the trial has focused on the appearance in court of Ms. Stewart, nine years since her conviction and sentencing on federal felony charges of false statements regarding her sale of shares in ImClone Systems (she also settled civil insider trading charges without admitting or denying them).

At one point this week she told the presiding judge, Justice Jeffrey K. Oing of New York State Supreme Court, “I keep looking at this entire episode of this lawsuit wondering why it isn’t — it’s a contract dispute, an understanding of what is written on the page, and it just boggles my mind that we’re here sitting in front of you.”

Justice Oing seemed to agree, and on Thursday ordered the parties to pursue mediation to resolve the matter. Legal experts I spoke to also expressed incredulity that the costly and time-consuming dispute has ended up in court, since the contract itself seems straightforward, with numerous clauses giving Macy’s exclusive rights to Martha Stewart products in various categories, including “soft home,” like sheets and towels, as well as housewares, home décor and cookware, and specifically limits her rights to distribute her products through any other “department store.”

J. C. Penney is undeniably a department store and one of Macy’s major competitors. So the only issue is whether a Martha Stewart boutique within a J. C. Penney store would qualify as a separate Martha Stewart store, since the contract states that the restrictions “shall not apply” to products “marketed or promoted” through the MSLO Web site “or MSLO store.” (MSLO is the often-used acronym for Martha Stewart Living Omnimedia.)

Even that shouldn’t be hard to determine. Charles Fried, a noted professor of contracts at Harvard Law School, told me that the law is well settled that contracts should be interpreted according to the plain meaning of their words and should reflect the intent of the parties, and that technical or specialized terms should be interpreted according to trade usage. While he said he didn’t want to comment on the Macy’s contract itself, he said, “Whether a boutique inside J. C. Penney qualifies as a Martha Stewart store shouldn’t be difficult to determine based on prevailing standards in the retail industry.”

In that regard, Mr. Johnson testified that J. C. Penney, and not Martha Stewart Living Omnmedia, would set prices of the merchandise, decide when it would be promoted, employ the people who sold the goods, own the goods, source the goods, book the sales, bear the risk and own the shop. No space would be leased to Martha Stewart’s company. J. C. Penney contended nonetheless that any space displaying the Martha Stewart mark and containing Martha Stewart merchandise qualified as a store.

Article source: http://www.nytimes.com/2013/03/09/business/the-headache-in-housewares-for-j-c-penney.html?partner=rss&emc=rss

Filed Under: Economy News Tagged With: , ,

Common Sense: The Headache in Housewares for J. C. Penney

March 8, 2013 by Leave a Comment

Yet that didn’t stop him from signing a deal with Martha Stewart — his “new best friend,” according to an e-mail — even though she already had an exclusive deal with Macy’s. “Macy’s deal is key. We need to find a way to break the renewal right in spring 2013,” he wrote in one message. “The ball is in her court now to talk to Macy’s about a break in a tight, exclusive agreement they have with her,” he said in another.

The e-mails emerged this week in a New York courtroom, where Macy’s has accused J. C. Penney of inducing Martha Stewart to breach her contract and is trying to block its rival from carrying out its plan to open Martha Stewart boutiques inside J. C. Penney stores. J. C. Penney has been floundering — it recently reported a staggering $4.28 billion loss in sales for the year since Mr. Johnson became chief executive, announced the layoff of 2,200 workers this week, and its shares have dropped more than 60 percent. So the star-crossed Martha Stewart deal may not be its biggest problem. But it’s a purely self-inflicted one. With calls mounting for Mr. Johnson’s ouster, the deal is also a window into his judgment, experience and management skills.

“I’m very concerned that this could be a fatal blow to J. C. Penney,” said Walter Loeb, a veteran retail analyst, referring to the lawsuit. That Mr. Johnson “would talk about ‘breaking’ a deal between Martha Stewart and Macy’s is simply incredible. Ron Johnson has never been a chief executive, and I can only assume this reflects his naïveté and lack of experience.”

Much of the coverage of the trial has focused on the appearance in court of Ms. Stewart, nine years since her conviction and sentencing on federal felony charges of false statements regarding her sale of shares in ImClone Systems (she also settled civil insider trading charges without admitting or denying them).

At one point this week she told the presiding judge, Justice Jeffrey K. Oing of New York State Supreme Court, “I keep looking at this entire episode of this lawsuit wondering why it isn’t — it’s a contract dispute, an understanding of what is written on the page, and it just boggles my mind that we’re here sitting in front of you.”

Justice Oing seemed to agree, and on Thursday ordered the parties to pursue mediation to resolve the matter. Legal experts I spoke to also expressed incredulity that the costly and time-consuming dispute has ended up in court, since the contract itself seems straightforward, with numerous clauses giving Macy’s exclusive rights to Martha Stewart products in various categories, including “soft home,” like sheets and towels, as well as housewares, home décor and cookware, and specifically limits her rights to distribute her products through any other “department store.”

J. C. Penney is undeniably a department store and one of Macy’s major competitors. So the only issue is whether a Martha Stewart boutique within a J. C. Penney store would qualify as a separate Martha Stewart store, since the contract states that the restrictions “shall not apply” to products “marketed or promoted” through the MSLO Web site “or MSLO store.” (MSLO is the often-used acronym for Martha Stewart Living Omnimedia.)

Even that shouldn’t be hard to determine. Charles Fried, a noted professor of contracts at Harvard Law School, told me that the law is well settled that contracts should be interpreted according to the plain meaning of their words, should reflect the intent of the parties, and that technical or specialized terms should be interpreted according to trade usage. While he said he didn’t want to comment on the Macy’s contract itself, he said, “Whether a boutique inside J. C. Penney qualifies as a Martha Stewart store shouldn’t be difficult to determine based on prevailing standards in the retail industry.”

In that regard, Mr. Johnson testified that J. C. Penney, and not Martha Stewart Living Omnmedia, would set prices of the merchandise, decide when it would be promoted, employ the people who sold the goods, own the goods, source the goods, book the sales, bear the risk and own the shop. No space would be leased to Martha Stewart’s company. J. C. Penney contended nonetheless that any space displaying the Martha Stewart mark and containing Martha Stewart merchandise qualified as a store.

Article source: http://www.nytimes.com/2013/03/09/business/the-headache-in-housewares-for-j-c-penney.html?partner=rss&emc=rss

Filed Under: Economy News Tagged With: , ,

Square Feet | The 30-Minute Interview: John T. Livingston

July 30, 2011 by Leave a Comment

Q It’s been a year since the acquisition. What changes have been made so far?

A I like to say that in one day we went global. Tishman was a New York-centric construction services firm, and through the merger with Aecom, we became global, with access to people in 125 countries, 400 offices and all kinds of business lines.

So it’s a much bigger platform now, and the changes are corporate and administrative. At the day-to-day level it’s the same company and we do the same thing: we build for clients all over the U.S. No one has left or resigned, and there were no layoffs.

Q The Tishman name won’t disappear, right?

A Yes, it will stay. Dan Tishman is incredibly well known in the business, and he’s our icon.

Q What is Dan’s role now?

A Dan is on the board and the vice chairman of the parent company. He also remains the chairman and C.E.O. of Tishman Construction. His role is a more strategic role, and more with new clients and corporate relationships.

Mine’s more day-to-day of the business affairs of the company.

Q You started at Tishman in 1994.

A I have a real estate development background, and when I came here, we set up Tishman Urban Development Corporation. I was the first — and I think only — president and C.O.O. of that company. It was an internal company that provided development management services to Tishman on the real estate side. About nine years ago Dan asked me to move over to the construction company; I came on as the president.

Q How is business?

A We’re beginning to feel that things are getting better. And some of the evidence of that is that some very significant projects in the last few months have restarted. One is called Revel, a large casino in Atlantic City. The other is the International Gem Tower in the Diamond District. They started a number of years ago; each stopped for about 18 months and started up again in the last six months.

Q How many projects is Tishman working on now?

A We’re doing about 125 projects — that’s Tishman — and primarily in this country.

Q What’s the breakdown between public and private projects?

A It’s pretty straightforward: you follow the money. If the money is in private-sector work, that’s where you are; and if the debt is harder to get, you follow the public-sector money. Today it’s 40 to 50 percent public, and around 50 percent private, where historically it had been 20 percent public.

Q You’re working on public and private projects at ground zero.

A We’re doing most of the work at ground zero. We built the original World Trade Center, which was John Tishman’s legacy, Dan’s father, and we built the original 7 World Trade Center that collapsed after the Trade Center collapsed. One World Trade Center is past the 74th floor the last time I checked; No. 4 is past the 33rd; No. 3 we’re building it up to grade, and about 80 percent of the steel has been sent over to the PATH Hall — the Calatrava-designed birdlike structure.

Q Has One World Trade Center been difficult for you?

A It’s a very complex building because: A) the sheer size of it; B) where it sits, which is basically on a postage-stamp location and it goes straight up; and C) there’s so much happening around and under it, including the PATH, the subway and the retail. You don’t see all this, but all this gets brought to grade, so it’s a very complicated piece of work. That’s why it’s taken the time it’s taken to figure all these things out. You’re putting so many pieces together — all under the view of the public that says, “Why can’t you finish it tomorrow?”

Q Tishman has also done work for Hudson Yards in Midtown.

A We did a little bit of work for Related on Hudson Yards, and we hope that will continue. We did a lot of preconstruction for almost five years. We’re helping them figure out what will get built.

Q Do you have a favorite project?

A I like the Plaza Hotel, because I was married there. When we first went in and started the renovation there, I tried to find the room that we stayed in and the ballroom that’s no longer there that we got married in.

Everybody knew how pretty it was from the outside, but they didn’t know how tired it was on the inside.

Article source: http://feeds.nytimes.com/click.phdo?i=7e5568e7867020e85d0b86af662baa5a

Filed Under: Business News Tagged With: , ,

The Boss: Out of Cuba, With a Suitcase

June 11, 2011 by Leave a Comment

We escaped to Jamaica on Aug. 22, 1961, then flew to Miami and were processed at the Freedom Tower. After that, we moved to New Britain, Conn., and stayed with my uncle. Each of us had taken just one suitcase from Cuba because my parents thought Castro couldn’t possibly stay in power long. But we stayed in Connecticut for nine years.

We left for Miami just before I started 10th grade, and I knew no one. The first day, I walked into Algebra II and saw two empty seats, one next to a girl and the other next to a guy. I sat next to the girl, and by Thursday of that week, I knew that she had also emigrated from Cuba, and she did her homework every night, and let me copy it every morning. Her name was Marcia, and I married her after our freshman year in college. We’re still married and have two children.

I attended the University of Florida for a degree in accounting. My father was an accountant, and I thought that having that background would give me a leg up in business. I was a competitive runner, but I knew that I wouldn’t be able to run well and be happily married and still get straight A’s. Something had to give, so I gave up running.

In 1977, I started working at what was then Peat, Marwick, Mitchell Company and stayed for three years. Then I worked for Certified Vacations, which operated Delta Dream Vacations. I was executive vice president for sales and marketing when I left in 1993. I learned how to run a business there.

Next, I joined Renaissance Cruises as senior vice president and chief financial officer, then became co-C.E.O. Renaissance was a luxury line that went bankrupt when the travel business plummeted after 9/11. The company and I had parted ways, however, before the attacks.

In 2002, I founded Oceania Cruises with a group of investors. We bought three ships that had belonged to Renaissance, and in 2007 sold a majority stake to a private equity firm. In 2008, we acquired Regent Seven Seas Cruises. The brands compete against each other, but we’ve achieved synergies and each company has learned from the other. Both are now under Prestige, the parent company.

I recall sitting around the table when we were starting Oceania, trying to come up with something different to offer. We had only $14 million in capital, a drop in the bucket for a cruise line. We had to find a business plan that improved our odds. Itineraries are similar for many cruise lines, so we focused on cuisine and teamed up with the chef Jacques Pépin.

I learned two lessons from the Renaissance bankruptcy. One is not to discount the importance of travel agents. Every business organization that has tried to marginalize them has paid a price. Many people thought that the Internet would eliminate all brick-and-mortar businesses, and travel agents were a symbol for them at that time. But travel agencies have evolved, and cruises are a complex product. Our travel-agent accounts are our lifeline.

The second lesson is, innovate or evaporate. But it’s just as bad to innovate too much as it is to do too little. As with anything, you need balance.

I’ve also learned that there’s no substitute for honesty. If you’re honest during good times and bad, people may disagree with you, but they’ll always trust you. I’d rather have someone’s trust than just about anything else.

As told to Patricia R. Olsen.

Article source: http://feeds.nytimes.com/click.phdo?i=7980fedf4fb4890dcab342cafdec87cb

Filed Under: Business News Tagged With: , ,