In 2005, Martha Stewart's company approached Macy's with an intriguing proposition. It offered the nation's second-largest department store chain the chance to sell a wide range of home goods bearing the name of the style doyenne. Stewart was already a household name, with a successful TV show and magazine and a line of housewares sold by discounter Kmart. There was one possible downside: Stewart had just been released from a federal prison after serving five months for obstruction of justice. Nonetheless, Macy's bit, and what followed was a partnership that made the Martha Stewart Collection one of the chain's most visible brands. It appeared to be a match made in heaven-until Dec. 6. That's when Macy's says it learned that Martha Stewart Living Omnimedia would an nounce the following day an agreement to open mini-boutiques inside hundreds of department stores operated by J.C. Penney. Macy's considers Penney a rival for middle-market customers. So in January, Macy's sued MSLO in New York State Supreme Court for violating their current five-year deal. Macy's is understandably upset, says Craig Johnson, president of the consulting firm Customer Growth Partners. "They threw Martha a nice little lifeline.
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