WEEHAWKEN, NJ, October 12, 1999 - Hanover Direct, Inc. (AMEX: HNV) today announced that an additional $3 million dollars has been invested in its e-commerce platform. The investment covers new Microsoft software applications used by 'knowledge workers' and 'tele-service operators' as well as the purchase of Dell Optiplex Computer equipment for use within every seat of its call center operations. Both are part of the Company's Computer Telephone Internet Integration (CTI2) strategy linking the functionality of Hanover's powerful system platform with enhanced customer service benefits. Hanover's call center employees will now have enhanced web access, email interface and larger monitors to better serve customers shopping not only Hanover's branded portfolio but also the customers of third-party accounts utilizing the services of Keystone Fulfillment. It represents the latest step in Hanover's commitment, begun three years ago, toward building a world-class, proprietary, fully integrated end-to-end solutions platform. That commitment has involved an investment in excess of $60 million dollars as well as the establishment of working relationships with some of the most advanced names in IT technology today such as Dell, Microsoft, Sun, Oracle and EMC.

"Hanover made a strategic commitment to building a world-class platform that in its functionality would provide a competitive point of differentiation in the level of the consumer shopping experience that branded manufacturers and retailers would view as the preferred choice," said Rakesh K. Kaul, President and Chief Executive Officer of Hanover Direct, Inc.

Mike Contino, Senior Vice President and Chief Information Officer for Hanover stated, "We were unique in that this initiative was started three years ago with architecture designed from the 'bottom up'. What has resulted is a platform that is flexible and modular, offering an end-to-end solution and enabling functional customization by client need."

"Our platform development involved partnering with leading systems resources creating integrated, customized technologies that were, in some cases, completely rebuilt around our needs," added Contino.

As part of Hanover's Computer Telephone Internet Integration (CTI2) strategy, new applications are constantly evaluated for use in the Company's operating system and call centers with Dell and Microsoft products utilized throughout Hanover's 'knowledge worker' enterprise for more than three years. The fast, Dell Optiplex Computer equipment with Intel 450 MHz processor, 100MB network card, 19" monitor and full multimedia desktop represent enhancements not yet widely used in the call center industry today.

"Utilization of the Dell Optiplex with 19" screen within the call center environment is truly unique. It has multimedia devices that can do sound and video allowing us to go to the next level in e-care, such as voice-over IP. By arming each of our 'tele-service' operators with the latest in high-tech tools, we enhance the customer experience and take our web stores to the next level," Contino stated.

Hanover Direct and its Keystone Fulfillment subsidiary operate call centers across the United States including Hanover PA, Lacrosse Wisconsin and San Diego CA. In recent years the Company has taken numerous steps to expand its 'tele-service' capabilities to provide a branded e-experience. As part of this strategy, Hanover has recently opened a new, 50-seat satellite call center in York PA representing a shift toward smaller, highly focused centers spun-off from their high-traffic hubs.

"A commodity shopping experience can be managed by a transactional platform. However, branded retailers and manufacturers are constantly seeking to provide a shopping experience that is seamless across the various channels that their consumers shop with them. By aligning with Keystone, they have the benefit of leveraging a world-class platform whose functionality reflects the accumulated knowledge capital of Hanover's thirteen brands and Keystone's clients. By contrast, Keystone's competitors will either have to play catch-up by striking alliances or making financial investments in third party networks to access minimum required functionality. Keystone's differences are reinforced by the 'white glove' clients, whose customers demand even higher levels of service, that have now begun to use this platform," stated Dick Metzler, President of Keystone Fulfillment.

Hanover Direct, Inc. (AMEX: HNV), and its business units, provide quality, branded merchandise through a portfolio of catalogs and e-commerce platforms to consumers, as well as a comprehensive range of Internet, e-commerce, and fulfillment services to businesses. The Brand Marketing division is comprised of the Company's catalog and e-commerce web site portfolio of home fashions, apparel and gift brands, including Domestications, The Company Store, Colonial Garden Kitchens, Kitchen & Home, Improvements, The Safety Zone, Silhouettes, Tweeds, International Male, Austad's, Undergear, and Gump's By Mail. The Company also owns Gump's, a retail store based in San Francisco. Each brand can be accessed on the Internet individually by name. The Web Services division is comprised of the Company's Internet marketing services group, systems platform, fulfillment and telemarketing and third party fulfillment service vendor, Keystone Fulfillment Inc.(www.keystonefulfillment.com). Information on Hanover Direct, including each of its divisions, can be accessed on the Internet at www.hanoverdirect.com.

Forward Looking Statements

The following may be deemed to be forward looking statements:
Dell and Microsoft Purchases Reinforce Company's Commitment Toward Building Its World Class E-Commerce Platform

It represents the latest step in Hanover's commitment, begun three years ago, toward building a world-class, proprietary, fully integrated end-to-end solutions platform.

"Hanover made a strategic commitment to building a world-class platform that in its functionality would provide a competitive point of differentiation in the level of the consumer shopping experience that branded manufacturers and retailers would view as the preferred choice,"

Cautionary Statements

The following material identifies important factors, which could cause actual results to differ materially from those in the forward looking statements identified above:

A general deterioration of economic conditions in the United States leading to increased competitive activity, including a business failure of a substantial size company in the retail industry, a reduction in consumer spending generally, or specifically with reference to the types of merchandise the Company offers in its catalogs. The failure of the Internet generally to achieve the projections made for it with respect to growth of e-commerce or otherwise.

The failure of the Company's computer systems to operate as desired, including as a result of the "Year 2000" problem.

The ability of the Company's computer systems to connect with the systems of others, and to be able to serve the others' fulfillment needs.

The Company has a history of operating losses. Continuation of the operating losses may prevent the Company from making the investments in e-commerce or systems that are required to be made to achieve a position of leadership in serving the e-commerce or systems needs of companies doing business, or desiring to do business, on the Internet. Also acquisitions may be prevented by the continuation of operating losses.

The ability of the Company to attract management with the requisite experience in e-commerce or services or in Internet businesses and to develop a culture that is consistent with the manner in which e-commerce or services are managed.

CONTACT:
AGG International, Public Relations
Paula Zwerdling
Managing Director
(212) 869-8230

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