CFOC Distribution Agreement Granted to Hanover Direct's Luxury Group; Diana Quasha Appointed President of New Venture.

WEEHAWKEN, N.J.--(BUSINESS WIRE)--Oct. 26, 1999--

Hanover Direct, Inc. (AMEX: HNV) today announced that it has entered into an exclusive licensing, distribution and marketing rights agreement with Compagnie Francaise de L'Orient et de la Chine (CFOC), a French company trading with China and based in Paris, France. Under the terms of this agreement a wholly owned Hanover Direct subsidiary will serve as the exclusive distributor of CFOC tabletop, ceramics, clothing and furniture to all retail outlets and print catalogs in North America and world-wide distribution over the Internet. Also announced was the appointment of Diana Quasha as President of the subsidiary handling the brand, which will be called Compagnie de la Chine in the United States.

Compagnie Francaise de L'Orient et de la Chine, a highly reputed French-China brand, offers collections of traditional Eastern designs crafted utilizing authentic artisan techniques assembled with a Western design sense and practicality. The brand will initially be launched in the Gump's By Mail catalog and Internet site and as an in-store boutique in Gump's of San Francisco, the legendary purveyor known for its unique collection of distinctive jewelry, gifts, home furnishings and Asian inspired products.

"Compagnie de la Chine is not just a premier home furnishings brand but a brand with signature qualities that are strongly in demand in the North American marketplace today. Francois Dautresme, known throughout Europe for his passion for handicrafts from the East, will personally participate in promoting the launch of the brand. Compagnie de la Chine's offering is an excellent addition to the Hanover Brands luxury portfolio and consistent with our strategy to accelerate top line market growth," stated Rakesh K. Kaul, President and CEO of Hanover Direct, Inc. "We are delighted to have Diana Quasha leading this important new business venture. Diana's prior background with Gump's of San Francisco and knowledge of the French marketplace will bring a unique combination of marketing and retail experience which will be invaluable during the North American launch of the Compagnie de la Chine brand."

Francois Dautresme, based in Paris, France and Beijing, China, serves as Chief Executive Officer for CFOC, and is known worldwide for his collections of traditional Chinese handicrafts and unique antique items from rural, countryside locations. For the past thirty-five years he has focused on preserving the heritage of China by bringing traditional Eastern designs to the West offering products made of native materials and manufactured with traditional artisan methods. A pre-eminent authority in this field, he is well known regionally throughout China and serves as the guiding spirit behind landmark museum exhibitions of these crafts. At CFOC he oversees all sourcing, design and manufacturing in China as well as cultural affairs and promotional events for CFOC worldwide. Gerard Dautresme, based in Paris, France, serves as Chief Operating Officer for CFOC. With CFOC since its founding, he oversees all operations, commerce and development in Europe.

Gerard Dautresme stated, "Hanover Direct is well known as a leading specialty marketer with a strong branded focus. It is also at the forefront of e-commerce, an important, currently untapped, opportunity for us. Our association with Hanover, through Compagnie de la Chine and the Gump's Gift Group, gives us assurance that our brand and its image will be managed with the highest standards. We view the U.S. market as prime for our products and have utmost confidence in Diana Quasha's ability to build a meaningful business for all involved."

Diana Quasha added, "Asian inspired products are at the forefront of design, a trend that will continue to grow. The products in the Compagnie de la Chine line are perfect for a broad range of retail outlets and channels of distribution. Gump's, the retail store, catalog and on-line e-commerce site, will set the standard for future distribution outlets."

Quasha most recently spent six years at Gump's of San Francisco where she served as a consultant. During that time Quasha made major contributions leading to the rejuvenation of the San Francisco store and its offering as well as the repositioning of the brand. Quasha has also held various buying and senior level management positions with Bloomingdale's. In addition, she currently serves as President of the Lenox Hill Neighborhood House, a not-for-profit settlement house in New York City.

The Compagnie de la Chine brand also features a unique, proprietary collection of Eastern inspired fashion apparel and accessories. Francoise Dautresme, Chairman of CFOC, serves as head designer for the apparel collection and also closely oversees its sourcing, manufacturing and marketing.

"While inspired by the East, our fashion philosophy is quite unique, perhaps opposite what design would consider the norm. We first focus on the fabrics; only then do we begin the designs. All garments are completely compatible and fresh, always 'in'. Our line, which includes Mongolian satin robes, indigo Mao shirts, yak wool coats, and Indian hand woven jacquards, has been attracting more and more attention not only throughout France and Europe but also in the United States, South America, even Japan," stated Francoise Dautresme.

"Compagnie de la Chine will be able to offer the U.S. market authentic Eastern inspired home furnishings and fashion apparel collections beautifully assembled with a French design sense. Manufactured to the highest quality standards and exclusively crafted by the artisans for us, many will be one-of-a-kind yet priced affordably for our market. No other line on the market today can match the spirit of what Compagnie de la Chine offers," added Quasha.

Reporting to Diana Quasha will be Virginia Pao, who will serve as Operations Manager. Pao will help establish systems and wholesale operations as well as act as the liaison between the U.S. Company and CFOC. Pao comes to the venture from Hoya Crystal where she served as manager for wholesale sales and specialty store accounts.

A showroom for the Compagnie de la Chine brand is located at 720 Fifth Avenue in New York City. Telephone: [phone].

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, Turiya, Colonial Garden Kitchens, Kitchen & Home, Improvements, The Safety Zone, Silhouettes, International Male, 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 Internet Services, Inc. (www.keystoneinternet.com). Information on Hanover Direct, including each of its divisions, can be accessed on the Internet at www.hanoverdirect.com.