NEW YORK-Bodum USA has filed suit against J.C. Penney alleging that the retailer breached the contract for the proposed shop concept involving the housewares manufacturer.
In the suit, which was filed in New York State Supreme Court, Bodum said J.C. Penney failed “to properly implement a program … to construct and feature Bodum’s merchandise in modern, chic boutique stores within JCP retail locations that are known as ‘shop-in-shops.’” By failing to do so, “JCP has breached its written agreement with Bodum, broken many other promises to Bodum and completely frustrated the entire purpose of the parties’ joint efforts, to Bodum’s great financial loss,” the filing said.
The filing said Bodum and J.C. Penney entered into the agreement in November 2012, calling for the retailer to construct 683 Bodum shop-in-shops and 683 shop-in-shops for Ordning&Reda (O&R), Bodum’s office-supply and stationery unit. The agreement said the shops were scheduled to open in March of this year, and that Bodum would contribute $5 million each toward the Bodum and O&R shops.
According to the filing, not one of the shops was opened in March, and J.C. Penney actually built a substantially smaller number of the shops than the 683 for both Bodum and O&R called for in the agreement. Bodum also said in the filing that J.C. Penney violated a number of other terms of the agreement, including pricing and the placement of O&R products “haphazardly” on shelves throughout its stores. The manufacturer added that J.C. Penney plans to abandon the O&R shop-in-shops and to launch the brand with “high-low” pricing, frequent sales and discount coupons, which “makes it very difficult to launch a new product line because the customer becomes confused about the prices of the O&R products.”
Bodum also alleged in the filing that it has “incurred substantial expenses” regarding the construction of the shops and supplying them with merchandise. The company also said it has been damaged “by loss of sales and profits for Bodum products with other customers that withdrew business from Bodum as a result of Bodum’s agreement with JCP that Bodum not provide more favorable terms to its other customers.”
A J.C. Penney spokesman said the company did not comment on pending litigation.