Hanover Direct Reports First Profit Since 1994

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Hanover Direct, Weehawken, NJ, last week reported its first profitable quarter since 1994, posting a net income of $4.8 million for the fourth quarter of the fiscal year ended Dec. 27. The company posted a net loss of $53.5 million for the same quarter last year.

Revenues for the quarter were $171.6 million, down 13.3 percent from the $197.9 million for the same period in 1996, primarily because of discontinued catalogs. Revenue from continuing catalogs decreased 3.5 percent to $171.4 million for the quarter, from $177.7 million for the year-earlier period.

"This is a direct result of the new business formula the company implemented in the beginning of 1997, including cost reductions, customer segmentation, targeted mailing and customer retention," Rakesh K. Kaul, company president and CEO, said in a prepared statement. He was not available for comment.

The quarter capped off a year in which the company's net loss shrunk to $10.9 million, from a net loss of $103.9 million before an extraordinary item of $1.1 million for 1996.

The company reported full-year revenues of $557.6 million for 1997, down 20.4 percent from $700.3 million for 1996.

For 1998, the company's plans for continued improvement include improving vendor supply management, fill rates and customer satisfaction; supporting brand growth through investments to increase catalog circulation, upgrade systems and strengthen management; leveraging customer databases through promotions, including credit marketing and membership services; developing third-party fulfillment capabilities; using digital distribution channels to leverage its information platform; and focusing on cost reduction through productivity and run-rate improvement.

Separately, the company named Richard B. Hoffmann, senior vice president and chief marketing officer. Hoffman will be responsible for strengthening Hanover's use of consumer promotions and credit marketing, increasing the company's use of television and the Internet and leveraging its large customer database. He previously was president and chief operating officer of the Jayhawk Acceptance Corp., a company that specializes in subprime auto and elective medical procedure financing.

Hanover Direct's catalog portfolio includes home fashions catalogs Domestications, The Company Store and Kitchen & Home; general merchandise catalogs Improvements, The Safety Zone and Colonial Garden Kitchens; women's apparel catalogs Silhouettes and Tweeds; men's apparel catalogs International Male, Austad's and Undergear; and gift catalog Gump's by Mail. The company also owns the San Francisco-based retail store Gump's.
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