Talk to the dial tone, Martha.
The CEO of Macy’s said he was so shocked when Martha Stewart phoned him to admit she had cut a secret deal with JCPenney that he hung up on her.
“I don’t remember hanging up on anyone in my life,” Lundgren testified yesterday in a Manhattan Supreme Court trial over Stewart’s Penney pact, which she cut despite a preexisting licensing agreement with Macy’s. “I was sick to my stomach.”
In a tense phone conversation on Dec. 6, 2011 — the day before Stewart announced Penney had shelled out $38.5 million for a 17-percent stake in her company, and cut a 10-year, $200 million licensing deal — Lundgren said he repeatedly asked why she had pursued the tie-up behind his back.
WireImage
To hear Macy’s CEO Terry Lundgren tell it, Martha Stewart (above) — who jumped to JCPenney’s Ron Johnson — acted like a schemer from a classic film in their bubbling feud.
Stewart began responding in stilted language, saying she was bound by a confidentiality agreement with Penney, as if she were reading from text written by lawyers, Lundgren testified as part of Macy’s case.
“She said this was going to be good for Macy’s. I think that’s when I hung up,” Lundgren said, adding that he hasn’t spoken to Stewart since.
Sales of Martha Stewart-branded goods at Macy’s surged 8 percent last year, Lundgren said, pooh-poohing the notion that he would have considered dropping the line instead of suing to block the Penney deal.
Later, under cross-examination by lawyers for Stewart and Penney, Lundgren was grilled on the finer details of the Macy’s licensing pact.
Stewart should be able to open in-store boutiques inside Penney stores, for example, because some Macy’s stores have a Starbucks in them, lawyers argued, pressing the CEO.
Lundgren countered that Charles Koppelman, then chairman of Martha Stewart Living Omnimedia, had told him when they originally negotiated their deal that Stewart only wanted to build an upscale flagship store “in Times Square or on Madison Avenue” — not at a downmarket rival like Penney.
Stewart wasn’t the only one cozying up to Lundgren as a friend while also double-dealing behind his back, the executive testified.
Shortly after JCPenney CEO Ron Johnson made a splashy presentation to Wall Street on Penney’s turnaround plans, Lundgren said he wrote to Johnson to congratulate him.
“Thank you, Terry. Your note means a ton to me,” Johnson replied in an e-mail dated Jan. 27, 2012, which was submitted as evidence by Macy’s.
“I consider you a friend.”
At the same time, however, Johnson was trading snarky e-mails with colleagues about Macy’s — including one in which the former Apple exec said Macy’s management “look asleep at the wheel.”
While Stewart chatted and negotiated with Johnson and his JCP higher-ups, she put on a friendly face toward Lundgren, according to testimony.
For example, in October 2011, in the midst of her Penney talks, Stewart called Macy’s and begged Lundgren for a $10,000 VIP seat at a posh New York dinner honoring Ralph Lauren and Oprah Winfrey.
Lundgren, knowing nothing of her pending Penney double-cross, gave her a ticket.
Then, a few weeks later, just a few weeks before the Penney pact went public, Stewart asked for and got exclusive tickets to the Macy’s Thanksgiving Day parade, Lundgren said.
jcovert@nypost.com
The devious diva
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