* Terms of settlement not disclosed
* Macy's says deal does not affect lawsuit against Penney
* Martha Stewart shares rise 12 pct in regular trading
By Neha Alawadhi and Aurindom Mukherjee
Jan 2 Martha Stewart Living Omnimedia Inc
said it settled a lawsuit with retailer Macy's Inc
over a home products deal with department store J.C. Penney Co
Martha Stewart did not disclose the terms of the settlement,
but said the deal would not be material to the company.
Macy's sued Martha Stewart and Penney in 2012 after the two
announced a partnership in 2011 to open Martha Stewart home
shops at hundreds of Penney stores.
Martha Stewart's shares rose as much as 12 percent to more
than a year high in regular trading on Thursday. The company's
stock has lost about 5 percent of its value since Macy's filed
the lawsuit in January 2012.
"The Macy's lawsuit was an overhang to the Martha Stewart
shares; the resolution now allows the company to focus on its
reorganization in its publishing division, a key catalyst toward
higher stock valuations," Noble Financial Capital Markets
analyst Michael Kupinski said.
Kupinski estimates revenue of more than $100 million for
Martha Stewart from its Penney deal, which will end in 2017.
In December 2011, Martha Stewart struck a deal with Penney
under which Stewart would design kitchen, bed and bath products
to be sold in shops-within-a-store at larger Penney stores that
would anchor a reinvention of the department store by then CEO
Penney and Martha Stewart revised their agreement in
October, eliminating cookware, bedding and bath products, and
other merchandise to which Macy's claims exclusive rights under
a 2006 deal. Penney also gave up its 17 percent stake in
With its broadcast and publishing revenues falling, Martha
Stewart has been focusing on boosting its merchandise business.
The company's merchandise revenue grew 7 percent in the
quarter ended Sept. 30.
The business accounted for about 42 percent of Martha
Stewart's total revenue in the quarter, up from about 30 percent
a year earlier.
Macy's also sought to stop Penney from selling any products
designed by home improvement doyenne Martha Stewart even if her
name doesn't appear on the items or their marketing.
Macy's said in a separate statement that the Thursday
settlement did not affect its outstanding claim against Penney.
Martha Stewart's shares closed up 9 percent at $4.57 on the
New York Stock Exchange on Thursday. Penney shares closed 3
percent lower at $8.88. Macy's shares ended flat at $53.39.