JCP's Martha minimum: $172.4 million

HTT Staff -- Home Textiles Today, 12/13/2011 2:08:35 PM

Washington - Martha Stewart Living Omnimedia filed paperwork with the Securities and Exchange Commission yesterday that discloses part of its arrangement with JCPenney - including a prohibition that prevents Omnimedia from licensing certain home products to other retailers.

Details about the product categories and the specific retailers barred from carrying them were not included in the filing.

By February 2013, JCPenney has agreed to build Martha Stewart stores in about 600 JCPenney stores according to Omnimedia's specifications, the filing reported. The stores will be staffed by trained salespeople.

The agreement between the two companies includes a list of products to launch in stores and at a jointly developed ecommerce site at the ventures' 2013 launch. The launch assortment was not outlined in the SEC filing.

In addition to paying Omnimedia a commission on products sold in Penney's Martha Stewart shops and online store, the retailer has committed to an annual marketing spend for Martha products as well as sales commissions and an annual design fee. Altogether, Penney has agreed to a minimum of $172.4 million in payments to Omnimedia and marketing promotions over the course of the agreement, which runs through Jan. 28, 2023, according to the filing.

JCPenney is taking a 16.6% stake in Omnimedia for $38.5 million and appointing two recently hired JCP execs to Omnimedia's board of directors: Michael Kramer, chief operating officer; and Daniel Walker, chief talent officer.