For the first quarter of 2000, Hanover Direct, Inc. reported revenues of $130.1 million compared to $127.7 million for the same period last year, an increase of $2.4 million or 1.9%. The net loss for the quarter was $(13.4) million or $(0.06) per common share, compared to a net loss of $(4.2) million or $(0.02) per common share for the prior year period. The increased net loss in the quarter was primarily due to continued investment in erizon, Inc., the Company’s e-commerce end-to-end services business.

"We continue to transform Hanover Direct into a recognized leader in all aspects of e-commerce. Our first quarter results reflect the aggressive short-term spending for capacity, technology and resources necessary to realize this strategic objective, and the reported loss was in line with our internal plan," stated Rakesh K. Kaul, President and Chief Executive Officer of Hanover Direct, Inc.

Hanover Brands, Inc., the Company’s business-to-consumer merchandise subsidiary, reported revenues of $123.6 million for the first quarter of 2000, compared to $127.0 million for the first quarter of 1999. Continuing catalog revenues increased by $4.9 million, or 4.1%, reflecting strong merchandise demand for Domestications, The Company Store, Scandia Down, Silhouettes, International Male, Gump’s and Improvements. Across all brands, 71 million catalogs were mailed during the period, versus 69 million for the prior year period. The total Hanover Brands revenue decline of $3.4 million, or 2.7%, traces to $8.3 million of revenues from catalogs discontinued in 1999, including Austad’s and Tweeds. Hanover Brands, Inc. reported an operating loss in the first quarter of 2000 of $0.3 million compared to an operating profit of $0.7 million in the first quarter of 1999, primarily due to the introductory costs of the Turiya and Company Kids catalogs, the launch of the Compagnie de la Chine merchandise line, and Internet advertising test programs.

Hanover Brands reported Internet sales of $15.0 million in the first quarter of 2000, 219% ahead of sales of $4.7 million in the first quarter of 1999 and 46% of the full year 1999 sales figure of $32.8 million. Internet customer e-mail accounts grew to 1.125 million, a 12.5% increase versus fourth quarter 1999.

The Keystone Internet Services, Inc. unit of erizon, Inc., the Company’s business-to-business e-commerce subsidiary, reported revenues of $6.5 million for the first quarter of 2000, compared to $0.7 million for the first quarter of 1999, an increase of $5.8 million or 829%. This reflects an increase in third-party revenues of Keystone Internet Services attributed both to an increase in the number of third-party clients, as well as the range of Internet services offered such as order processing, customer care, shipping and distribution services.

erizon, Inc. reported an operating loss for the first quarter of 2000 of $(7.8) million, compared to an operating loss of $(3.6) million in the first quarter of 1999, due to investment spending toward systems development and upgrades to the information/technology platform, as well as higher consulting and facility/equipment rental expenses related to the expansion of erizon, Inc. A new 17,000 square foot facility was opened in the first quarter of 2000 in Edgewater, New Jersey and currently houses over 60 professionals within the Internet production, design and development group and the Internet marketing team.

"The spending to expand and enhance our IT/Operational platform reflects the Company’s commitment toward erizon and the tremendous upside it has within the business-to-business space, especially given new competitive developments. Keystone and Desius make a powerful business combination, offering the seamless end-to-end service platform needed by ‘bricks-and-clicks’ retailers wanting to enter the e-commerce space," Kaul added.

On March 24, 2000, the Company amended its credit facility with Congress Financial Corporation, which provides the Company with a maximum credit line of up to $82.5 million. A portion of the new facility was used in connection with the redemption of the Company’s $16.0 million Term Financing Facility and $8.0 million of Industrial Revenue Bonds and to retire letters of credit issued by UBS, AG and guaranteed by Richemont Finance S.A. supporting such facilities. Also in March, the Company entered into two unsecured credit facilities of $10 million and $25 million, respectively, with Richemont Finance S.A. As of March 25, 2000, the Company had $58.3 million of borrowings outstanding under the Congress and Richemont facilities.

"The Company’s amended credit facilities," noted Brian C. Harriss, Senior Vice President and Chief Financial Officer, "enable the Company to continue to invest in the erizon, Inc. service platform and operations infrastructure and provide superior levels of service to both our own brands and the third-party clients of erizon, Inc."

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, general merchandise and gift brands, including Domestications, The Company Store, Turiya, Domestications Kitchen & Garden, Kitchen & Home, Encore, Improvements, Silhouettes International Male, Undergear, 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®. 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 erizon subsidiary also services the logistical, IT and fulfillment needs of the Hanover Brands subsidiary. Information on Hanover Direct, including each of its subsidiaries, can be accessed on the Internet at www.hanoverdirect.com.

AGG International, Public Relations
Paula Zwerdling / paula@aggintl.com
Paul Scott / paulscott@aggintl.com
Tel: (212) 869-8230

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