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JCP invests in Martha Stewart Living Omnimedia

08 Dec '11
4 min read

J. C. Penney Company Inc. and Martha Stewart Living Omnimedia, Inc. announced they have entered into a strategic alliance and will join forces to create a unique and comprehensive retail experience featuring Martha Stewart products, know-how and advice.

Beginning in February 2013, customers will be able to visit distinct Martha Stewart retail stores inside the majority of jcpenney department stores. These Martha Stewart stores are intended to be destinations where consumers can experience an engaging and inspiring environment and buy a variety of affordable, high-quality home and lifestyle merchandise designed and curated by Martha Stewart and her team.

Staffed by trained associates, the Martha Stewart stores will also give consumers direct access to the products and educational tips that have made Martha Stewart America's leading lifestyle expert. J. C. Penney will market and source the products.

Under the terms of this 10-year commercial agreement, the two companies will also jointly develop an e-commerce site, expected to launch in 2013. The site will offer Martha Stewart expertise and enable consumers to purchase a wide range of home and lifestyle products, including those sold in the Martha Stewart stores inside jcpenney, and other merchandise designed or selected by Martha Stewart. MSLO is expected to receive in excess of $200 million from J. C. Penney over the initial 10-year contract period.

J. C. Penney has invested $38.5 million for 11 million newly issued shares of Class A common stock at $3.50 a share, for a 16.6 percent stake in MSLO. In addition, J. C. Penney will have representation on MSLO's Board of Directors.

MSLO also announced that it will pay a special dividend of $0.25 per share on Dec. 30 to shareholders of record as of Dec. 19.

Ron Johnson, chief executive officer of J. C. Penney Company, Inc., said, "I have long admired Martha Stewart's extraordinary influence on the way American families live and enjoy their lives. For nearly two decades she has been the primary person we turn to for advice regarding food, entertaining, decorating, and celebrating life's memorable moments.

"The opportunity to work with Martha and create an entirely new shopping experience, both in-store and online, is a once in a lifetime opportunity. The Martha Stewart brand embodies quality, beauty, inspiration and possibility and we intend for Martha Stewart stores to be a key centerpiece of our new strategy to transform jcpenney into America's Favorite Store."

Martha Stewart, founder and director of MSLO, said, "Ron Johnson is a true innovator and someone who has been fundamentally redefining the retail experience. I am greatly impressed with his plans for changing an American classic, J. C. Penney, to make it a very new and different shopping experience. To partner with J. C. Penney, Ron and his extraordinary team is a big and important step in realizing my dream of putting our Martha Stewart designed products within easy reach of an even broader consumer audience. I'm also very excited to work with J. C. Penney to create an online shopping experience, which will offer a broad range of Martha Stewart products. I cannot wait to get started on this new venture."

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