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Hanover records small profit, higher margins

Raising $1.9 million through the sale of its Improvements business, and at the same time building margins and cutting costs, Hanover Direct Inc. returned to profitability during the first quarter, recording a small profit of $192,000, compared with a prior-year loss of $1.8 million.

Sales at the catalog retailer slipped by 6.4 percent, to $102.5 million from $109.5 million, due to a softness in demand in a weak retail environment and a 2.1 percent reduction in overall circulation as the company pared its mailing lists.

Despite the decline in sales, average gross margin widened by 100 basis points, or 1.0 percentage point, to 36.0 percent from 35.0 percent a year ago. Gross margin dollars, hurt by the decline in sales, fell by 3.7 percent, to $36.9 million from $38.3 million.

In a lift to the bottom line, costs were cut by 3.5 percent, to $35.7 million from $37.0 million last year, generating a cash savings of $1.3 million.

Hanover Direct Inc.

Qtr. 3/29 (x0000 2003 2002 % Change
a-First-quarter results include a special charge of $277,000, compared with $233,000 last year; a $1.9 million gain on the sale of its Improvements business; a $15,000 provision for state income taxes vs. $30,000 a year ago. Including the payment of preferred stock dividends and accretion, the net loss applicable to common shareholders totaled $3.4 million, or two cents a share, down from $4.7 million, or three cents a share the year before.
Sales $102,474 $109,511 -6.4
Oper. income (EBIT) 21 (194)
Net income 192a (1,810)a
Per share (diluted (0.02) (0.03)
Average gross margin 36.0% 35.0%
SG&A expenses 34.9% 33.8%

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