But Macy's said the settlement does not impact its lawsuit against J.C. Penney Co., which is still ongoing.
Macy's Inc. and Martha Stewart Living Omnimedia Inc. said Thursday that their settlement terms are confidential and not material to their businesses. Both companies said that they look forward to "a continued, successful partnership together."
Macy's has had an exclusive merchandising contract with Martha Stewart since 2006, including items like bedding and bath products.
Stewart's company and Penney signed a merchandising deal in December 2011 to develop mini Martha Stewart shops. That prompted Macy's to sue both companies for violating its exclusive agreement with Martha Stewart.
Martha Stewart Living Omnimedia and J.C. Penney have already scaled back their partnership. In October the department store chain said it would no longer sell a broad range of home and bath products designed by Martha Stewart Living Omnimedia but would continue to sell a smaller batch of Martha Stewart items, including window treatments, rugs and party supplies.
Martha Stewart is looking to boost merchandising sales as it continues to grapple with a weak publishing business amid sluggish advertising sales. In October it said its quarterly net loss narrowed, though revenue fell 22 percent to $33.8 million, hurt by weakness in its broadcasting and publishing divisions.
Macy's, meanwhile, has been seeing strong sales. In November it said quarterly net income rose 22 percent will revenue rose 3 percent to $6.28 billion.
J.C. Penney spokeswoman Daphne Avila said the company had no comment on the Macy's settlement with Martha Stewart Living Omnimedia.
In morning trading Thursday, Macy's shares rose 40 cents to $53.80, Martha Stewart Living Omnimedia rose 19 cents to $4.39 and J.C. Penney slipped 11 cents to $9.04.