WEEHAWKEN, NJ, MAY 11, 1999 -- Hanover Direct, Inc. (AMEX: HNV) today announced its results for the first quarter ended March 27, 1999.

For the first quarter of 1999, Hanover Direct, Inc. reported revenues of $127.7 million compared to $124.5 million for the same period last year, an increase of $3.2 million or 2.6%. Revenues from continuing operations increased $9.0 million or 8.1% from the same period last year. Revenues for repositioned catalogs, which consist of Austad's, Tweed's, Colonial Garden Kitchens and Safety Zone, decreased $5.8 million from the same period last year. Earnings before interest, taxes, depreciation and amortization ("EBITDA") were $(.6) million for both the 1999 and 1998 periods, despite 1999 incremental expenses relating to e-commerce initiatives of $2.5 million. The net loss for the quarter was $(4.2) million, or $(.02) per common share, compared to a net loss of $(4.6) million, or $(.02) per common share, for the prior year. The per share amounts were calculated based on weighted average shares of 210,444,784 and 203,788,774 for the current year and prior year period respectively.

President and Chief Executive Officer Rakesh K. Kaul stated, "We are extremely pleased to report that during our first quarter our continuing brands ran on plan with strong operating performance and improved catalog and telemarketing productivity that raised catalog operating results, more than offsetting expenses incurred by our e-commerce initiatives. Silhouettes, The Company Store, Gump's and Improvements exceeded prior year first quarter results, and Domestications, showing significant response rate improvement, also posted positive sales results."

"Through the successful migration of our catalog shoppers to our branded web sites as well as through a series of successful online alliances, Internet demand topped $4.7 million for the quarter versus $.7 million during the first quarter of 1998 with full year 1998 at $8.3 million. Each of our branded sites has now been migrated to our own, internal service platform which is enabling us to quickly deliver state-of-the-art usage enhancements to our growing customer database. Our captive Internet e-mail customer address file is now in excess of 500,000."

"We are extremely pleased with the launch of our discount shopping club, The Shoppers Edge, which has initially been offered to our customers through a telemarketing initiative. We also continue to be pleased with results generated via our first subscription program launched last year."

"Keystone Fulfillment, the centerpiece of the web services division strategy, which is focused on adding new customers with the full range of services they require, continues to grow and currently has fourteen accounts. With the introduction of our joint venture with RS Software India Limited, we are now positioned to cost-effectively provide scaleable resources, including systems consulting, on a round-the-clock basis to all of our third-party customers while also focusing on tomorrow's cutting edge technological advances. Our recently announced technology alliance with HNC Internet Solutions will also lead to online shopping enhancements to be used by our own brands as well as by our third-party customers."

"Our goal is to be a leader in all aspects of e-commerce. This includes developing new ventures, such as factory direct startups, to help others wanting to enter e-commerce. Our web services division is now poised to supply a comprehensive range of services to others wanting to enter this exciting retail opportunity, helping them stay competitive and deliver consumer value via online presence."

Revolver debt increased seasonally to $9.9 million, but was below the prior year level of $13.2 million primarily due to lower inventory carrying levels. Availability, including cash on hand, under the Company's revolving credit agreement was approximately $30.5 million at March 27, 1999.

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
This press release contains the following statements which may be deemed to be forward looking statements within the meaning of the safe harbor provisions of The Private Securities Litigation Reform Act of 1995:

"Our recently announced technology alliance with HNC Internet Solutions will also lead to online shopping enhancements to be used by our own brands as well as by our third-party customers."

"Our goal is to be a leader in all aspects of e-commerce. This includes developing new ventures, such as factory direct startups, to help others wanting to enter e-commerce. Our web services division is now poised to supply a comprehensive range of services to others wanting to enter this exciting retail opportunity, helping them stay competitive and deliver consumer value via online presence."

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 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 that are required to be made to achieve a position of leadership in serving the e-commerce 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 in Internet businesses and to develop a culture that is consistent with the manner in which e-commerce is managed.

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

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