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Is Martha Stewart Worth the Fight?

Written by George Anderson

Among the mistakes made by Ron Johnson as CEO at J.C. Penney, one of the biggest may have been his deal to acquire a stake in Martha Stewart Living and sell Martha endorsed (JCP Everyday) and branded home goods within Martha shops in its stores and on its website.

While the lawsuit with Macy's could be seen as a reason for my labeling the deal a mistake, I think the bigger error may have been in overvaluing what the Martha brand means to the chain's core base as well as younger customers it set out to attract when Mr. Johnson took over at Penney.

In a channel surfing exercise yesterday, I happened upon Martha Stewart's Cooking School program on PBS. The resident twenty-something was in the room when I stopped on Martha. "Who is that again?" he asked.

While only a sample of one, the question made me think back to a comment made by Doug Stephens, president of Retail Prophet, in a RetailWire discussion that followed the announcement of the Penney/Martha deal in 2011. He wrote, "If Ron Johnson's intention is also to invent a time machine that can transport J.C. Penney customers back to the time when Martha Stewart was cool, then I think it might work. Failing that, I'm a little confused."

More recently, Mark Cohen, former CEO of Sears Canada and current professor at Columbia Business School, told Forbes, "Martha is past her sell-by date."

While Penney won a minor victory when a judge refused to grant Macy's a restraining order preventing the sale of JCP Everyday goods endorsed by Martha, JCP and Martha still have a long way to go to win, in both the judicial and retailing sense. What a kick in the can it would be if Penney and Martha eventually won in the dispute with Macy's only to lose on the sales floor where it counts most.

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