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The Globe and Mail

J.C. Penney puts disputed Martha Stewart goods on hold

Martha Stewart testifies at the New York State Supreme Court March 5, 2013 in New York.

David Handschuh/AP

J.C. Penney Co. Inc. has agreed to hold off on its plan to sell certain Martha Stewart-designed products in its stores at least until an April 8 court date.

Macy's Inc., which claims the exclusive rights to sell the products, has sued J.C. Penney and Martha Stewart Living Omnimedia Inc. to prevent its rival from selling them.

Justice Jeffrey Oing of New York state Supreme Court on Thursday adjourned a trial over the dispute until April because of attorneys' scheduling conflicts, and ordered the companies to try to resolve their differences in the meantime.

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The adjournment is a blow to J.C. Penney, which has said Martha Stewart is key to its turnaround plan and the products had already been manufactured.

Last week, the company reported a drop in same-store sales of 32 per cent in the quarter ended Feb. 2 as shoppers continue to balk at new "everyday" pricing strategies that reduce the number of sales. The Financial Times reported on Friday that the retailer is slashing 2,200 jobs to reduce costs.

A spokeswoman for J.C. Penney declined to comment on Thursday.

"Macy's, of course, will comply with the court's orders," said Jim Sluzewski, a spokesman for Macy's.

MSLO said Martha Stewart, who testified in court on Tuesday, held a "productive conversation" with Macy's chief executive Terry Lundgren before the judge ordered the companies into mediation. "We view today's actions as a positive step forward," MSLO said in a statement. Asked about the conversation, Mr. Sluzewski said Macy's had no comment.

Last week, Mr. Lundgren testified that he had not spoken to Ms. Stewart since she called in December 2011 to tell him about her deal with J.C. Penney, the night before it was announced publicly. He said he felt "sick" to his stomach and hung up the phone on Ms. Stewart.

In testimony on Thursday, Charles Koppelman, who stepped down as chairman of MSLO last year, said the company should have given Macy's the chance to match J.C. Penney's offer, but he said he was rebuffed by Ms. Stewart and the board.

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Last summer, Judge Oing put in place a temporary block that stopped J.C. Penney from selling Martha Stewart-branded home goods in product categories Macy's claims it has exclusively, including cookware, bedding and bath.

J.C. Penney then said it would sell Martha Stewart-designed items in those categories under the brand "JCP Everyday" starting this spring.

Earlier this week, as the trial dragged on, Macy's lawyer Theodore Grossman asked the judge to consider expanding the block to include all Martha-Stewart designed goods in the exclusive product categories.

Under Thursday's agreement, J.C. Penney will hold off on selling the products until the April court date.

The agreement does not impact J.C. Penney's plans to sell Martha Stewart-branded window coverings and other product categories not claimed by Macy's. Those products are expected in J.C. Penney stores in late March or early April.

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