WEEHAWKEN, NJ, AUGUST 10, 1998 -- Hanover Direct, Inc. (AMEX: HNV) today announced its results for the second quarter and six months ended June 27, 1998.

President and Chief Executive Officer Rakesh K. Kaul stated, "We are pleased to report continued improvement in our operating performance from the prior year period. Improved product margin results, productivity improvements in telemarketing and fulfillment and exciting new market initiatives are all contributing toward restoring the company to profitability."

Kaul added, "EBITDA cash flow was positive for the second quarter of 1998, and, with early receipt of fall inventory, fill rates are up and backorders are down. The Company Store and Silhouettes have consistently achieved strong market growth throughout the first and second quarters. And, although several of our brands are performing below our expectations, overall revenues from continuing catalogs/operations increased over the prior year period."

"We have increased catalog circulation expenses and have made marketing investments that are designed to maximize the performance of our catalog portfolio during the important, and historically profitable, fourth quarter. Several new initiatives are also underway which leverage the Company's customer database and provide easy access for our customers via new, electronic outlets. Our new subscription service initiative, which commenced in May, is delivering better than expected operating results."

For the second quarter of 1998, Hanover Direct reported revenues of $134.6 million compared to $133.8 million for the same period last year. Revenues from continuing operations increased $2.1 million or 1.6% from the prior year. Earnings before interest, taxes, depreciation and amortization ("EBITDA") improved by $1.3 million to $0.1 million, compared to the same period last year. The net loss for the second quarter was $5.0 million, $(.02) per common share, compared to a net loss of $5.7 million, $(.04) per common share, for the prior period. The per share amounts were calculated based on weighted average shares of 203,982,414 and 158,741,451 for the current year and prior year periods, respectively.

Total revenue for the six months ended June 27, 1998 was $259.1 million compared with $263.5 million for the six months ended June 28, 1997. Revenues from continuing operations increased $4.0 million or 1.6%. EBITDA improved to $(.5) million from $(3.4) million in the prior year period. The net loss for the six months ended June 27, 1998 was $9.8 million, or $(0.5) per common share, compared to a net loss of $12.4 million, or $(0.8) per common share, for the same period last year. The per share amounts were calculated based on weighted average shares of 203,885,594 and 151,656,168 for the current year and prior year periods, respectively. The increase in weighted average shares was due to a $50 million rights offering completed in June, 1997.

Revolver debt increased $5.2 million to $18.3 million during the quarter to fund working capital requirements and operating losses. Remaining availability under the Company's debt agreement was $25.3 million at June 27, 1998. As previously announced, the Company received $13.6 million in cash on July 31, 1998 in connection with the exercise of outstanding warrants by Richemont Finance S.A., its largest shareholder.

Kaul concluded, "The recently announced warrant exercise by Richemont is further indication of their support for the Company and reiterates their confidence in the Company's turnaround programs and its long-term potential."

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. Its branded portfolio of catalogs includes: Domestications (Home Fashions - Mid Market brands); The Company Store and Kitchen & Home (Home Fashions Ð Upscale brands); Improvements, The Safety Zone and Colonial Garden Kitchens (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 also owns Gump's, a retail store based in San Francisco. Information on all of Hanover Direct's retail titles can be accessed on the Internet individually by name.

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

Back to Top