Hanover Direct reports 1996 first quarter results; increases shareholder rights offering to $50 million, subject to board approval.WEEHAWKEN, N.J.--(BUSINESS WIRE)--May 15, 1996--Hanover Direct (AMEX AMEXSee: American Stock Exchange :HNV HNV Hebrew Names Version HNV High Nature Value (farmland) HNV Heilbronner Hohenloher Haller Nahverkehr GmbH (German) ) today reported financial results for the first quarter ended March 30, 1996. For the first quarter ended March 30, 1996, Hanover Direct reported revenues of $165.5 million, compared to revenues of $176.6 million for the first quarter of 1995. The net loss for the 1996 first quarter was ($9.5 million), or ($0.10) per common share, compared to a net loss of ($4.9 million), or ($0.05) per common share, in the first quarter of 1995. President and chief executive officer Rakesh K. Kaul stated, "While sales were down 6%, this was primarily due to reduced revenues from six previously discontinued dis·con·tin·ue v. dis·con·tin·ued, dis·con·tin·u·ing, dis·con·tin·ues v.tr. 1. To stop doing or providing (something); end or abandon: catalogs. Sales from continuing catalogs increased 2% primarily because higher response rates in the 1996 first quarter more than made up for a reduction in continuing catalog catalog, descriptive list, on cards or in a book, of the contents of a library. Assurbanipal's library at Nineveh was cataloged on shelves of slate. The first known subject catalog was compiled by Callimachus at the Alexandrian Library in the 3d cent. B.C. circulation. Event though paper prices in the first quarter of 1996 were 21% higher than in the first quarter of 1995, the higher response rates resulted in a reduction in selling expenses to 27.4% of revenues in the 1996 first quarter, down from 28.6% of revenues in the 1995 first quarter." Kaul added, "Our earnings and operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. were, however, negatively impacted by continuing operating difficulties at our new home fashions distribution facility. While we believe these problems are solvable, we anticipate continuing inefficiencies which will further penalize pe·nal·ize tr.v. pe·nal·ized, pe·nal·iz·ing, pe·nal·iz·es 1. To subject to a penalty, especially for infringement of a law or official regulation. See Synonyms at punish. 2. our bottom line in fiscal 1996. We are finalizing a detailed plan to address these operational issues, but it will require an additional capital investment of approximately $3.0 million this year. We expect to see improvements in the performance of the home fashions distribution center by 1996 year end." In order to deal with the operational problems and provide financial flexibility, the company has decided to increase its previously announced shareholder rights offering by an additional $10 million to $50 million, subject to approval by its board of directors. This offering will only be made by means of a prospectus. NAR NAR National Association of REALTORS NAR Nucleic Acids Research (journal) NAR National Association of Rocketry NAR Nationale Arbeidsraad (Dutch: National Labor Council; Brussels, Belgium) Group Ltd., the company's majority shareholder, has agreed to continue to stand by and purchase all shares not subscribed for by common shareholders. Following the completion of the shareholder rights offering, the company anticipates that it will have adequate capital to support its operations. Since joining Hanover Direct approximately two months ago, Kaul has focused his efforts on formulating and implementing plans to return the company to profitability. Kaul said, "We are in the process of putting in place several key initiatives. One such initiative is expanding company-wide our telemarketing telemarketing, the practice of selling goods or services to customers by means of the telephone or of surveying consumer preferences in telephone conversations. `up sell' program in which we are training our telemarketers to be salespersons, and from which we have already seen quantifiable Quantifiable Can be expressed as a number. The results of quantifiable psychological tests can be translated into numerical values, or scores. Mentioned in: Psychological Tests improvements. Also, I am looking forward to capturing the latent Hidden; concealed; that which does not appear upon the face of an item. For example, a latent defect in the title to a parcel of real property is one that is not discoverable by an inspection of the title made with ordinary care. upside Upside The potential dollar amount by which the market or a stock could rise. Notes: This is basically an educated guess on how high a stock could go in the near future. See also: Bull, Downside opportunities in our 18 million name 36-month buyers list, leveraging our purchasing and sourcing capabilities and strengthening our organizational team so that we can achieve our goal of leadership in the direct marketing industry." -0- Cautionary Statements: The statements below constitute forward looking statements which involve risks and uncertanties: We expect to see improvements in the performance of the home fashions distribution center by 1996 year end. Following the completion of the shareholder rights offering, the Company anticipates that it will have adequate capital to support its operations. I am looking forward to capturing the latent upside opportunities in our 18 million name 36-month buyers list, leveraging our purchasing and sourcing capabilities and strengthening our organizational team so that we can achieve our goal of leadership in the direct marketing industry. The following are important factors, among others, that could cause the Company's actual results to differ material from those expressed in any forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. made by, or on behalf, of the Company: A general deterioration de·te·ri·o·ra·tion n. The process or condition of becoming worse. in the economic conditions in the United States leading to increased competitive activity including a business failure of a substantial size company in the retail industry; and a reduction in consumer spending Consumer demand or consumption is also known as personal consumption expenditure. It is the largest part of aggregate demand or effective demand at the macroeconomic level. generally or specifically with reference to the types of merchandise that the Company offers in its catalogs; an increase in the failure rate of consumer indebtedness INDEBTEDNESS. The state, of being in debt, without regard to the ability or inability of the party to pay the same. See 1 Story, Eq. 343; 2 Hill. Ab. 421. 2. generally; and an increase in credit sales by the Company accompanied by an increase in its bad debt experience with respect to consumer debt; a delay in the implementation of the actions to be taken by the company to increase the efficiency of its operations; rapid increases and decreases in the volume of merchandise that passes through the company's warehouse facilities; the failure of the Rights Offering to be consummated con·sum·mate tr.v. con·sum·mat·ed, con·sum·mat·ing, con·sum·mates 1. a. To bring to completion or fruition; conclude: consummate a business transaction. b. on a timely basis; the failure of the company to achieve quarterly profitable operating results by the end of fiscal 1996; the failure of the company to solve its operating problems at the new Roanoke fulfillment ful·fill also ful·fil tr.v. ful·filled, ful·fill·ing, ful·fills also ful·fils 1. To bring into actuality; effect: fulfilled their promises. 2. center; a delay in the implementation of postal rate decreases or an increase in paper costs; the inability of the company to attract and employ high quality executives to fill management positions. -0- Hanover Direct, Inc. is a leading direct specialty retailer that markets via a portfolio of branded specialty catalogs Specialty catalogs are a promotion and distribution technique commonly employed by direct marketers. They describe, graphically and verbally, a limited range of products. Specialty catalogs are a good promotion/distribution choice for new products. offering home fashions, general merchandise and apparel, with 1995 total company revenues of $750 million. Hanover Direct titles include Domestications, a leading specialty home textiles catalog; The Company Store, an upscale direct marketer of down comforters and other down and related products for the home; Colonial Garden Kitchens, featuring work saving and lifestyle enhancing items for the kitchen and home; International Male, offering unique men's fashions with an international flair; Tweeds, the European-inspired women's fashion catalog; Kitchen & Home, an upscale kitchen and home products catalog; Gump's, a leading upscale catalog of exclusive gifts, which opened its new retail store in downtown San Francisco San Francisco (săn frănsĭs`kō), city (1990 pop. 723,959), coextensive with San Francisco co., W Calif., on the tip of a peninsula between the Pacific Ocean and San Francisco Bay, which are connected by the strait known as the Golden in March 1995; The Safety Zone, a direct marketer of safety, prevention and protection products; Silhouettes, featuring everyday, workout Workout Informal repayment or loan forgiveness arrangement between a borrower and creditors. workout 1. The process of a debtor's meeting a loan commitment by satisfying altered repayment terms. , special occasion and career fashions for larger-sized women; Undergear, a leader in activewear, workout wear and fashion underwear for men; Austad's, a direct marketer of golf equipment, related apparel and accessories; and Improvements, a leading do-it-yourself home improvement catalog. The company has a venture with Sears in which it mails several of its catalogs under various names to Sears customers. -0-
Hanover Direct Inc.
Consolidated Operating Summary
(in thousands except per share data and number of shares)
13 Weeks Ended
March 30, 1996 April 1, 1995
Revenues $165,527 $176,592 Operating costs and expenses Cost of sales and operating expenses 108,438 112,714 Provision for catalog and facility closings 1,100 316 Selling expenses 45,391 50,503 General and administrative expenses 15,333 15,755 Depreciation and amortization 2,998 1,451 Income (loss) from operations (7,733) (4,147) Interest expense, net (1,663) (751) Interest income 169 85 Income (loss) before income taxes (9,227) (4,813) Income tax provision (250) (90) Net income (loss) (9,477) (4,903) Preferred stock dividends (59) (45) Net income (loss) applicable to common shareholders ($9,536) ($4,948) Net income (loss) per share ($ 0.10) ($ 0.05) Weighted average shares outstanding 93,493,937 92,790,015 CONTACT: Hanover Direct, Inc., Weehawken Debra A. Berliner, 201/319-3491 e-mail: 102521,1311@CompuServe.com |
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