HRT Denies It Has Decided to Shut Zodys : Says Some Retailers Have Shown Interest in Buying Ailing Unit

Times Staff Writer

The chief executive of HRT Industries, which operates the 32 ailing Zodys discount department stores, acknowledged Tuesday that several retailers have expressed interest in buying or leasing the properties. He denied, however, that management has decided to close or sell the chain.

He made his remarks in response to an unusual statement by Three D Departments, an East Hartford, Conn., company that operates leased linen and domestic departments in Zodys, that it “has been advised of the high probability” that some or all of the Zodys stores might close. Zodys operates 29 stores in Southern California and three in Las Vegas.

Three D said that business from Zodys accounted for 40% of Three D’s 1985 sales and that closing the stores “could have a material adverse effect” on earnings for the fiscal year ending Aug. 3.

More Than Rumors


Reached in Honolulu, Chairman Bernard Abrams said the statement was issued because a plethora of rumors had convinced the company that Zodys planned to announce a closing, perhaps at a meeting around Feb. 20.

“We put the pieces together from all the conversation we hear,” he said. “We felt that the time had come that we could no longer just call them rumors.”

Steven J. Green, HRT chief executive, said: “Let me make one categorical statement: No management decision has been made to close any of the stores.” However, he added: “We are constantly reviewing the results of the company totally and the stores individually. At such point that we determine some action is necessary, we will take it.”

Green added: “I appreciate that (Abrams) felt it was necessary to make those remarks for his stockholders, but . . . what he said had a serious and, unfortunately, negative effect on our store operation.”

2,500 Employees

Green said HRT’s West Los Angeles office had been flooded with calls from people saying they had heard that the chain was shutting down. Zodys has about 2,500 employees.

Company officials have no plans for a Feb. 20 meeting, Green said, but they intend to review last year’s figures soon, probably before the end of the month.

Ralphs and Vons are among several retailers that have expressed interest in Zodys properties over the last few months, Green said.


Roger E. Stangeland, Vons chairman, said his El Monte-based grocery company had attempted to reach an agreement last August to lease several Zodys stores but was told by HRT that it had been outbid by Ralphs. Byron Allumbaugh, chairman of Ralphs, a unit of Federated Department Stores, had no comment.

Zodys has not been profitable for several years. HRT filed for protection from creditors under Chapter 11 of the U.S. Bankruptcy Code in November, 1982. In December, 1983, McCrory Corp., a unit of privately held Rapid-American, and Schottenstein Stores formed a joint venture to bail out the troubled company.

Sold Shoe Stores

HRT emerged from Chapter 11 proceedings in March, 1984. McCrory then bought out Schottenstein and converted HRT to private ownership. Later that year, HRT sold its 83 shoe stores and announced that it would close its six Northern California stores.


In addition to Zodys, HRT owns Jody-Tootique, a profitable dress-making operation that manufactures under the Jody’s and Diane Von Furstenberg labels. Green said HRT has annual sales of about $300 million, with Jody-Tootique accounting for “in excess of $50 million.”

Since taking the top spots at HRT in April, 1984, Green said he has been attempting “to do what was necessary to make the company profitable and to re-establish its retail niche in the Los Angeles market.” He described that as being at the low end of the market in terms of price, with emphasis on ethnic markets, particularly Latino and Asian.

Green acknowledged that HRT is reducing costs by laying off some of the 180 workers in its home office but said no store employees have been laid off in the cost-cutting effort.

Court Decision


He denied that a recent decision by Circuit City Stores to phase out its leased consumer electronics and appliance departments in Zodys department stores was a serious blow. Circuit City President Richard Sharp said he doubted that those closures would have any effect on Zodys’ future because Circuit City’s operations occupied only 4% of the space in Zodys stores.

“I would be astounded if our leaving caused them to make any decision” about the future of the chain, he said.

Expressing frustration over Three D’s announcement, Green said: “If this company (HRT) had the ability to produce money as it has rumors, we’d be the richest company in America.”

Times staff writer Nancy Rivera contributed to this story.