Hanover Direct Reports Third Quarter Results
Hanover Brands Core Catalog Revenues Increase 14.1% versus Prior Year Period Hanover Brands Internet Revenues of $15.7 million Grow 86.9% Over Third Quarter 1999 Keystone Revenues at $6.8 Million Increase 300% over $1.7 million in Prior Year Period

WEEHAWKEN, NJ, November 8, 2000 – Hanover Direct, Inc. (AMEX: HNV) today announced its results for the thirteen and thirty nine weeks ended September 23, 2000.

For the third quarter of 2000, Hanover Direct, Inc. reported revenues of $140.4 million compared to $121.7 million for the same period last year, an increase of $18.7 million or 15.4%. The net loss for the quarter was $(14.8) million or $(.07) per common share, compared to a net loss of $(2.7) million or $(.01) per common share for the prior year period. The increased net loss in the quarter was primarily due to higher distribution expenses, systems development costs, and administrative costs related to the expansion of the Company’s business-to-business e-commerce transaction services subsidiary.

"The Hanover Brands subsidiary reported strong sales, profit, customer list and Internet growth," stated Rakesh K. Kaul, President and Chief Executive Officer of Hanover Direct, Inc., "demonstrating that the core direct commerce, webcat business is positioned well for the important holiday season. We are also pleased with the revenue growth reported by the Keystone Internet Services, Inc. unit of erizon, Inc."

"The Company has taken decisive actions," stated Kaul, "to improve profitability and enhance shareholder value. These include: 1) Realizing approximately $6.5 million in annual overhead savings through the elimination of approximately 90 FTE’s in the third quarter of 2000; 2) ceasing additional funding of startup initiatives as of the end of the 3rd quarter of this year; 3) consolidating management of the mid-market and upscale home fashions business under one President, Mr. Steve Goldberg, to increase vendor leverage and synergies across our two largest businesses; and 4) reviewing additional potential cost reductions opportunities."

Hanover Brands, Inc., the Company’s direct commerce subsidiary, reported revenues of $133.6 million for the third quarter of 2000, compared to $119.9 million for the third quarter of 1999. Revenues from continuing catalogs increased by $16.5 million, or 14.1%, reflecting strong consumer demand across most major merchandise categories: primarily women’s apparel, home furnishings, general merchandise and gifts. Hanover Brands, Inc. reported an operating profit of $4.3 million for the period compared to an operating profit of $2.6 million in the third quarter of 1999. Year-to-date revenues from continuing catalogs of $393.5 million grew 9.5% over the first three quarters of 1999.

Hanover Brands third quarter Internet sales were approximately $15.7 million (representing approximately 11.8% of total sales), an increase of 86.9% versus third quarter 1999 sales of approximately $8.4 million (representing approximately 7.0% of total sales). During the third quarter 2000, Internet customer e-mail accounts grew to 1.4 million, an 11.3% growth versus second quarter 2000. Year-to-date Internet sales of approximately $46.4 million grew approximately 134% over the first three quarters of 1999.

The Keystone Internet Services, Inc. unit of erizon, Inc., the Company’s business-to-business e-commerce subsidiary, reported revenues of $6.8 million for the third quarter of 2000, compared to $1.7 million for the third quarter of 1999, an increase of $5.1 million or 300%. Year-to-date in 2000, Keystone’s revenues of $20.4 million have increased $16.9 million over the first three quarters of 1999. This reflects an increase in Internet order processing, customer care, and shipping and distribution services utilized by its existing customer base as well as recently announced new accounts, such as eZiba.com and Camdens. Keystone continues to pursue a list of prospects to utilize the Company’s new Maumelle, Arkansas facility.

erizon, Inc. reported an operating loss for the third quarter of 2000 of $(12.4) million compared to an operating loss of $(3.4) million in the third quarter of 1999, due to start-up investments related the company’s new 700,000 square foot facility in Maumelle, Arkansas, which expanded the Company’s total warehouse fulfillment capacity to two million square feet, and added staffing.

The Company incurred an additional loss from operations of $(4.3) million during the third quarter of 2000 reflecting corporate level general and administrative expenses, losses related to the start-up of the Company’s Always In Style joint venture, and professional and consulting fees.

The Company reported a net loss of $(41.9) million or $(.20) per share for the thirty-nine weeks ended September 23, 2000 compared to a net loss of $(12.7) million or $(.06) per share for the comparable period last year. During the thirty-nine weeks ended September 23, 2000, net cash provided by financing activities totaled $62.3 million primarily due to net proceeds from the preferred stock financing of $68.1 million, partially offset by a net decrease in borrowings of $3.3 million and the payment of debt issuance costs of $2.4 million related to the March 2000 refinancing of the Company’s credit facilities with Congress Financial Corporation that provides the Company with a maximum credit line, subject to certain limitations, of up to $82.5 million.

"The combination of revenue growth and cost reductions," concluded Kaul, "should result in the Company achieving positive operating EBITDA cashflow in the 4th quarter of 2000, and for the entire fiscal year in 2001 and annually thereafter, excluding any reserves associated with cost reductions actions developed and announced in the future. The Company is currently developing a fiscal 2001 operating budget which it will present to the Board of Directors for approval. In addition, the Company continues to explore consolidation opportunities that will amortize erizon’s unabsorbed fixed and central costs, create competitive scale, and build frontmover advantage in the third party fulfillment business."

At September 23, 2000, the Company had $1.5 million in cash and cash equivalents compared to $2.8 million at December 25, 1999. Remaining availability under the Congress Revolving Credit Facility as of September 23, 2000 was $31.7 million, bringing total liquidity including cash on hand on this date to $33.2 million.

"Hanover Direct, Inc.," stated Brian C. Harriss, Senior Vice President & Chief Financial Officer, "has principally completed its investment activities in both Hanover Brands and erizon, and future spending will focus on revenue-generating expenditures which increase profitability such as our recent addition of approximately 135 new seats in three of our satellite telemarketing centers or volume-related machinery and equipment additions in Maumelle as Keystone’s third party throughput grows. In the third quarter of 2000, the Company provided approximately $0.5 million for the recognition of severance costs related to the elimination of approximately 90 FTE’s. Despite the loss of KBKids and the recent notification from Global Sports Interactive that it intends to consolidate the operations of Fogdog, which it proposes to acquire, within its own fulfillment infrastructure, Keystone continues to show positive sales growth and should double annual revenues this year compared to last year."

"Our balance sheet and liquidity are strong in comparison to our expected requirements, and we ended the third quarter with $33.2 million in cash and credit availability," concluded Harriss. "Our year-end cash and credit availability should improve from this starting point as we anticipate positive fourth quarter holiday period sales momentum which would liquidate the traditionally high inventory levels we hold going into the year-end period."

A conference call with the management of Hanover Direct, Inc. to review the third quarter 2000 results discussed herein will be held on Wednesday, November 8, 2000 at 11 a.m. Eastern Standard Time. To hear about Hanover Direct's latest strategic initiatives in both its B-to-B and B-to-C business subsidiaries. If you would like to participate in the call, please call 212-231-6047 between 10:50 a.m. and 10:55 a.m. Eastern Standard Time. A re-play of the conference will be available immediately following the call until 11:59 p.m. Eastern Standard Time on November 8, 2000, and can be accessed by calling 800-633-8284, Access #: 16825460.

About Hanover Direct, Inc.
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. Hanover Brands, Inc. 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, Company Kids, Turiya, Domestications Kitchen & Garden, Kitchen & Home, Encore, Improvements, The Safety Zone, Silhouettes, International Male, Undergear, Scandia Down, and Gump’s By Mail. Hanover Direct is the exclusive distributor of the Compagnie de la Chine brand in North America; the Company owns Gump’s, a retail store based in San Francisco; and the Company has a majority equity stake in Always In Style, LLC. Each brand can be accessed on the Internet individually by name. erizon, Inc. is comprised of Keystone Internet Services, Inc. (www.keystoneinternet.com), the Company’s third party, end-to-end, fulfillment, logistics and e-care provider, and Desius, LLC, the Company’s joint venture with RS Software (India), Ltd., offering 24/7-web shop services and e-commerce systems development. The subsidiary also services the logistical, IT and fulfillment needs of the Hanover Brands, Inc. Information on Hanover Direct, including each of its subsidiaries, can be accessed on the Internet at www.hanoverdirect.com.

Forward Looking Statements
The following statements may be deemed to be forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995:

"The Hanover Brands subsidiary reported strong sales, profit, customer list and Internet growth," stated Rakesh K. Kaul, President and Chief Executive Officer of Hanover Direct, Inc., "demonstrating that the core direct commerce, webcat business is positioned well for the important holiday season. We are also pleased with the revenue growth reported by the Keystone Internet Services, Inc. unit of erizon, Inc."

"The Company has taken decisive actions," stated Kaul, "to improve profitability and enhance shareholder value. These include: 1) Realizing approximately $6.5 million in annual overhead savings through the elimination of approximately 90 FTE’s in the third quarter of 2000; 2) ceasing additional funding of startup initiatives as of the end of the 3rd quarter of this year; 3) consolidating management of the mid-market and upscale home fashions business under one President, Mr. Steve Goldberg, to increase vendor leverage and synergies across our two largest businesses; and 4) reviewing additional potential cost reductions opportunities."

"Keystone continues to pursue a list of prospects to utilize the Company's new Maumelle, Arkansas facility."

"The combination of revenue growth and cost reductions," concluded Kaul, "should result in the Company achieving positive operating EBITDA cashflow in the 4th quarter of 2000, and for the entire fiscal year in 2001 and annually thereafter, excluding any reserves associated with cost reductions actions developed and announced in the future. The Company is currently developing a fiscal 2001 operating budget which it will present to the Board of Directors for approval. In addition, the Company continues to explore consolidation opportunities that will amortize erizon’s unabsorbed fixed and central costs, create competitive scale, and build frontmover advantage in the third party fulfillment business."

"Hanover Direct, Inc.," stated Brian C. Harriss, Senior Vice President & Chief Financial Officer, "has principally completed its investment activities in both Hanover Brands and erizon, and future spending will focus on revenue-generating expenditures which increase profitability such as our recent addition of approximately 135 new seats in three of our satellite telemarketing centers or volume-related machinery and equipment additions in Maumelle as Keystone’s third party throughput grows. In the third quarter of 2000, the Company provided approximately $0.5 million for the recognition of severance costs related to the elimination of approximately 90 FTE’s. Despite the loss of KBKids and the recent notification from Global Sports Interactive that it intends to consolidate the operations of Fogdog, which it proposes to acquire, within its own fulfillment infrastructure, Keystone continues to show positive sales growth and should double annual revenues this year compared to last year."

"Our balance sheet and liquidity are strong in comparison to our expected requirements, and we ended the third quarter with $33.2 million in cash and credit availability," concluded Harriss. "Our year-end cash and credit availability should improve from this starting point as we anticipate positive fourth quarter holiday period sales momentum which would liquidate the traditionally high inventory levels we hold going into the year-end period."

Cautionary Statements
The following material identifies important factors that 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 a reduction in consumer spending generally, or specifically with reference to the types of merchandise which the Company offers in its catalogs or over the Internet, or which are offered by its third-party fulfillment clients.

The failure of the Internet generally to achieve the projections made for it with respect to growth of e-commerce or otherwise. The imposition of regulatory, tax or other requirements with respect to Internet sales. Actual or perceived technological difficulties or security issues with respect to conducting e-commerce over the Internet generally or through the Company’s websites or those of its third-party fulfillment clients specifically.

A business failure of, or liquidity problems experienced by, one or more of the Company’s third-party fulfillment clients. The ability of the Company to enter into new third-party fulfillment contracts and/or maintain existing third-party fulfillment contracts.

The ability of the Company to equip and open its new fulfillment center at the same time it is receiving inventory from customers who require fulfillment services in time for the holiday selling season.

The ability of the Company to attract and retain senior and mid-level management generally (including in the erizon sales force and in the management of the catalogs) and specifically with the requisite experience in e-commerce or Internet businesses.

The risk that key vendors or suppliers may reduce or withdraw trade credit to the Company, convert the Company to a cash basis or otherwise change credit terms, or require the Company to provide letters of credit to support its purchase of inventory, increasing the Company’s cost of capital and impacting the Company’s ability to obtain merchandise in a timely manner.

The inability of the Company to timely obtain and distribute merchandise leading to an increase in backorders and cancellations.

An increase in postage, printing and paper prices and/or the inability of the Company to reduce expenses generally as required.

The inability of the Company to access the capital markets due to market conditions generally and the Company's business situation specifically.

Cost constraints and the inability to access sufficient additional capital to maintain and upgrade the Company's information technology platform in order to serve the e-commerce needs of companies doing business (or desiring to do business) on the Internet.

The Company's dependence to date on Richemont and its affiliates for financial support and the fact that they are not under any obligation ever to provide any additional support in the future.

HANOVER DIRECT, INC. CONSOLIDATED OPERATING SUMMARY (in thousands of dollars, except per share amounts) (Unaudited)
	13 Weeks Ended				39 Weeks Ended
	Sept. 23, 2000		Sept. 25, 1999		Sept. 23, 2000		Sept. 25, 1999
Net revenues	$ 140,381		$ 121,656		$ 413,937		$ 380,607
Operating costs and expenses:
Cost of sales and operating expenses	97,207		76,117		281,584		240,645
Write-down/ (recovery) of inventory of discontinued catalogs	--		(1,511)		--		(1,835)
Selling expenses	34,465		29,468		103,485		95,486
General and administrative expenses	19,178		16,068		56,105		46,397
Depreciation and amortization	1,933		2,314		6,871		6,858
	152,783		122,456		448,045		387,551
(Loss) from operations	(12,402)		(800)		(34,108)		(6,944)
Interest expense, net	2,367		1,703		7,690		5,183
(Loss) before income taxes	(14,769)		(2,503)		(41,798)		(12,127)
Income tax provision	30		185		135		579
Net (loss)	(14,799)		(2,688)		(41,933)		(12,706)
Preferred stock dividends and accretion	1,146		159		1,233		476
Net (loss) applicable to common shareholders	$ (15,945)		$ (2,847)		$ (43,166)		$ (13,182)
Net (loss) per share:
Net (loss) per share – basic and diluted	$ (.07)		$ (.01)		$ (.20)		$ (.06)
Weighted average common shares outstanding – basic and diluted (thousands)	213,773		210,843		213,085		210,641
EBITDA
(Earnings before interest, taxes, Depreciation and amortization)
Loss from operations	$ (12,402)		$ (800)		$ (34,108)		$ (6,944)
Depreciation and amortization	1,933		2,314		6,871		6,858
	$ (10,469)		$ 1,514		$ (27,237)		$ (86)

Reportable segment data were as follows (in thousands of dollars):
Results for the 13 Weeks Ended September 23, 2000:	Direct Commerce	B-to-B Services	Eliminations/ All Other	Consolidated
Net revenues from external customers	$ 133,598	$ 6,783	$ --	$ 140,381
Inter-segment revenues	--	26,090	(26,090)	--
Income/ (Loss) from operations	$ 4,258	$ (12,387)	$ (4,273)	$ (12,402)
Interest income/(expense)	(1,661)	(548)	(158)	(2,367)
Income/ (Loss) before income taxes	$ 2,597	$ (12,935)	$ (4,431)	$ (14,769)
Results for the 13 Weeks Ended September 25, 1999:
Net revenues from external customers	$ 119,923	$ 1,733	$ --	$ 121,656
Inter-segment revenues	--	23,379	(23,379)	--
Income/ (Loss) from operations	$ 2,640	$ (3,440)	$	$ (800)
Interest income/(expense)	(464)	(1,239)	--	(1,703)
Income/ (Loss) before income taxes	$ 2,176	$ (4,679)	$ --	$ (2,503)

Results for the 39 Weeks Ended September 23, 2000:	Direct Commerce	B-to-B Services	Eliminations/ All Other	Consolidated
Net revenues from external customers	$ 393,525	$ 20,412	$ --	$ 413,937
Inter-segment revenues	--	72,769	(72,769)	--
Income/ (Loss) from operations	$ 8,006	$ (31,062)	$ (11,052)	$ (34,108)
Interest income/(expense)	(4,788)	(2,188)	(714)	(7,690)
Income/ (Loss) before income taxes	$ 3,218	$ (33,250)	$ (11,766)	$ (41,798)
Results for the 39 Weeks Ended September 25, 1999:
Net revenues from external customers	$ 377,121	$ 3,486	$ --	$ 380,607
Inter-segment revenues	--	73,363	(73,363)	--
Income/ (Loss) from operations	$ 5,083	$ (12,027)	$	$ (6,944)
Interest income/(expense)	(1,343)	(3,840)	--	(5,183)
Income/ (Loss) before income taxes	$ 3,740	$ (15,867)	$ --	$ (12,127)

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