Judy’s Ends Informal Talks on Sale of Assets

Judy’s, a Van Nuys-based apparel retailer, said Monday it has broken off negotiations to sell some of its assets to an unidentified suitor.

The company said the talks, which had not been announced previously, apparently prompted the leap in its stock price last week. The stock tumbled on Monday back to a bid price of $3.75, up only 25 cents from a week before.

Responding to an inquiry from the National Assn. of Securities Dealers, Judy’s issued a news release Monday saying the informal sale talks were terminated Friday. The company declined to elaborate, except to say the talks were initiated by the other party.

Judy’s is controlled by its founders, the Israel family, which holds 78% of the company’s 4.5 million outstanding shares. The stock normally is so inactive that on many days it does not trade at all. On Oct. 27, for example, no shares changed hands, and the stock remained at a bid price of $3.50.

But things changed the next day, last Tuesday, when 17,500 shares were traded, and the bid price jumped to $4. The stock continued to move up all week, on Friday hitting a bid price of $5.50 on a trading volume of 24,300 shares. The previous three-year high for Judy’s was $4.50, and its three-year low is $2.37 1/2.

Monday’s close of $3.75, off $2.25 from Friday, left the stock at a price close to its average for the year.

“The stock came for sale, and there was nobody to buy it,” said Irwin Geduld, a partner in the securities firm of Herzog Heine Geduld.

Geduld acknowledged that his firm, which trades the stock, did most of the buying last week, but he would not say on whose behalf, calling such information confidential.

For the fiscal year ended Jan. 31, Judy’s earned $1.2 million, or 26 cents a share; the year before, $1.0 million, or 22 cents a share. Sales were up 12%, to $56.7 million.

For the six months ended July 31, earnings were $347,000, or 8 cents a share, down from $392,000, or 9 cents a share, in large part because of higher insurance costs, said Ben Sumner, the company’s vice president for finance. Sales rose 4%, to $25.9 million. The figures are adjusted for a 2-for-1 stock split in May.

Judy’s went public in 1972. It owns and operates 69 women’s clothing stores under its own name, and another 26 men’s clothing stores under the GHQ name. All its stores are in California, Arizona, Nevada, New Mexico and Texas, Sumner said.