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Martha Stewart testifies in retail suit

Macy’s at odds with J.C. Penney over her brand

Struggling J.C. Penney says it is entitled to sell products from Martha Stewart — shown leaving a New York courthouse Tuesday — in its “store within a store” format.

Jemal Countess/Getty Images

Struggling J.C. Penney says it is entitled to sell products from Martha Stewart — shown leaving a New York courthouse Tuesday — in its “store within a store” format.

NEW YORK — It was a familiar scene for Martha Stewart’s day in court: photographers camped at the back and front entrances of a Manhattan courthouse, members of the news media lining up for seats, spectators buzzing about what she might say.

Nine years after being sentenced to prison for lying about a stock sale, Stewart took the stand Tuesday in New York state Supreme Court in a very different trial, this one concerning which retailers have the right to sell her sheets, towels, and other home goods.

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Stewart, who never testified in her insider trading trial, seemed at ease on the stand. She presented cool, crisp testimony meant to support her attempt to sell her home merchandise not just through Macy’s, with which she has an exclusive contract in some categories, but also through its rival J.C. Penney.

Stewart stayed on point and reinforced her brand during her four-hour testimony. Discussing her deal to sell goods at Kmart, starting in 1997, she said, ‘‘I paid the price for going mass very early on: The garden club of Greenwich canceled my speaking engagement.’’

She added, ‘‘That was a very difficult deal for me to sign — I lived in a pretty house with a pretty garden; I wrote about upscale things.’’

But, she said, the home products for the less affluent at the time were unappealing. ‘‘They were buying polyester; they were buying designs that were really, really sad,’’ she said. She recalled critics telling her, ‘‘Oh, poor people don’t do their laundry as often as rich people, so they don’t want light colors,’’ but the top-selling towel color her first year at Kmart was white.

The proceedings were part of lawsuits first brought by Macy’s in 2012 against Martha Stewart Living Omnimedia and J.C. Penney. The main allegation is that Stewart’s company violated a contract with Macy’s when it agreed to provide similar merchandise to Penney’s.

Despite the declining financial picture at her company, which reported last month that it had lost $56 million in 2012 as revenue fell, Stewart seemed confident. “Why do you think the headlines are pitting me against J.C. Penney’s and Macy’s?’’ she asked. ‘‘They’re fighting over something, and it’s not just home. It is our amazing product.’’

Macy’s began selling Martha Stewart products in 2007; at the end of 2009, when her contract with Kmart expired, it was the only retailer to sell her products in categories like home decor, bedding, and bath.

Until Penney’s came along. As part of an ambitious — and, so far, faltering — plan to turn the retailer around, its newly appointed chief executive, Ron Johnson, decided in 2011 to woo Stewart and devote big sections of Penney’s stores to her product.

Stewart testified that she was ‘‘flabbergasted’’ by Macy’s chief executive Terry J. Lundgren’s reaction when she tried to tell him about the Penney’s deal in a phone call.

“I don’t know if I got through even half the points before he hung up,’’ she said.

Stewart said Tuesday that she was ‘‘disappointed’’ with parts of the Macy’s relationship: She had expected her products to sell $400 million a year there, and they are selling only $300 million.

She seemed sporting about the media attention — during a break, she took pictures of the courtroom with a small camera — but her comments about how this lawsuit had blown up recalled remarks from nine years ago.

“I’ve spent the entire episode of this lawsuit wondering what — it’s a contract dispute, an understanding of what’s written on the page,’’ Stewart said Tuesday. ‘‘It just boggles my mind that we’re here sitting in front of you, judge. It’s a real problem for a company like ours.’’

In 2004, although she did not testify, she read a statement before the judge that similarly deplored the frenzy. ‘‘A small personal matter’’ became ‘‘an almost fatal circus event of unprecedented proportions,’’ she said then.

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