NEW YORK (AP) - It's been a tough week to be Ron Johnson.
J.C. Penney's CEO was in the hot seat again on Friday in New York State Supreme Court after facing investors this week over a dismal quarterly earnings performance.
This time he was being scrutinized by Macy's lawyers for a stack of emails that he wrote that they claim show he repeatedly pushed home diva Martha Stewart to try to break an exclusive deal with his rival so Penney could be the sole department store distributor of the domestic diva's goods.
"I need to propose a deal so she can go to Terry Lundgren at Macy's and break the agreement," according to one email Johnson wrote to an executive at Penney in August 2011.
Lundgren is CEO of Macy's.
Penney ended up signing a pact in December 2011 with Martha Stewart Living Omnimedia to open shops at most of its stores in spring 2013. But one month later, Macy's renewed its long-standing exclusive deal to sell some of Martha Stewart's products such as cookware and bedding. And then immediately sued Martha Stewart Living and Penney.
The trial, which began Feb. 20, focuses on whether Macy's has the exclusive right to sell some of Martha Stewart branded products such as cookware, bedding and bath items.
Macy's is seeking to block Penney from opening Martha Stewart mini shops in its stores. The shops are part of Johnson's big plan to reinvent the shopping experience at the beleaguered chain. The stakes are high for all three companies but particularly for Penney.
Penney's shares have now lost nearly 60 percent of their value since early last year when Johnson revealed his plan to scale back most sales in favor of everyday low prices. The stock drop is the latest indictment that Johnson's turnaround is failing Wall Street as much as on Main Street. Johnson is counting on the shops, particularly Martha Stewart's, to bring back shoppers who have fled to rivals like Macy's.
Johnson, who is expected to be questioned by Penney attorneys later Friday, acknowledged that getting a deal with Martha Stewart was critical and acknowledged that he knew the deal was exclusive with Macy's but stopped short in saying he wanted to break the exclusive. "I knew there had to be an amendment" to a deal between Macy's and Martha Stewart.
