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Hanover Direct Reports 1998 Third Quarter Results Revenues Up, Positive EBITDA Cash Flow, ($.01) Per Share Loss Vs. $(.02) WEEHAWKEN, NJ, NOVEMBER 10, 1998 -- Hanover Direct, Inc. (AMEX: HNV) today announced its results for the third quarter and nine months ended September 26, 1998. President and Chief Executive Officer Rakesh K. Kaul stated, "We are pleased to report improvements in our operating performance in spite of a general softening in the catalog retail environment starting in September. Company wide, revenues for the quarter increased over the prior year with revenues from continuing catalogs posting a 1.1% increase. The Company Store and Silhouettes continue to show significant year-to-year growth in demand. Quarterly, as well as year-to-date, EBITDA cash flow was positive." Kaul added, "With margin and fill rate improvements and a decrease in backorders as well as overall reductions in fulfillment costs, we are now able to focus on new means of business expansion. Millions of Internet users will have the opportunity to shop the Hanover portfolio via the previously announced alliance with Excite, representing the first step in our Company's strategic e-commerce initiative. Keystone Fulfillment, our third party fulfillment business, has added several new clients and we continue to invest in this initiative and upgrade the Company's information system platform. We have also increased investments in our data warehouse initiative to strengthen our data mining capabilities." For the third quarter of 1998, Hanover Direct reported revenues of $123.4 million compared to $122.6 million for the same period last year. Revenues from continuing operations increased $1.3 million or 1.1% from the prior year. Earnings before interest, taxes, depreciation and amortization ("EBITDA") improved by $1.1 million to $1.6 million, compared to the same period last year. The net loss for the third quarter was $3.0 million, $(.01) per common share, compared to a net loss of $3.5 million, $(.02) per common share, for the prior period. The per share amounts were calculated based on weighted average shares of 207,909,428 and 200,329,521 for the current year and prior year periods, respectively. Total revenue for the nine months ended September 26, 1998 was $382.5 million compared with $386.1 million for the nine months ended September 27, 1997. Revenues from continuing operations increased $5.4 million or 1.4%. EBITDA improved to $1.1 million from $(2.9) million in the prior year period. The net loss for the nine months ended September 26, 1998 was $12.8 million, or $(0.06) per common share, compared to a net loss of $15.8 million, or $(0.09) per common share, for the same period last year. The per share amounts were calculated based on weighted average shares of 205,226,872 and 167,906,290 for the current year and prior year periods, respectively. The increase in weighted average shares was primarily due to a $50 million rights offering completed in June, 1997. Revolver debt increased $1.7 million to $20.0 million during the quarter to fund seasonal working capital requirements. Remaining availability under the Company's revolving credit agreement was $21.2 million at September 26, 1998. Hanover Direct, Inc. (AMEX: HNV) is a leading, specialty direct marketer with a diverse branded portfolio of home fashions, general merchandise, women's and men's apparel and gift catalogs and proprietary products delivered via direct mail and electronic commerce platforms. Its branded portfolio of catalogs includes: Domestications and Colonial Garden Kitchens (Home Fashions - Mid Market brands); The Company Store and Kitchen & Home (Home Fashions - Upscale brands); Improvements and The Safety Zone (General Merchandise brands); Silhouettes and Tweeds (Women's Apparel brands); International Male, Austad's and Undergear (Men's Apparel brands); and Gump's By Mail (Gift brands). The Company owns Gump's, a retail store based in San Francisco and recently launched Keystone Fulfillment Inc., offering third party fulfillment and proprietary electronic commerce services. Information on all of Hanover Direct's retail titles can be accessed on the Internet individually by name.
CONSOLIDATED OPERATING SUMMARY (in thousands except per share data and number of shares)
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