• Andrea Lillo

Hanover focuses on core brands

While Hanover Direct is still mindful of its bottom line and expenses after last year's restructuring, it will continue to invest in its three core brands and also look for other growth opportunities in brand extensions and partnerships with Internet companies, Tom Shull, chairman, president and ceo, said at last week's annual meeting of shareholders.

In the past, Hanover had spread its brand equity too thin with too many businesses, said Shull. Hanover is now firmly focused on investing in its three core brands of The Company Store, Domestications and Silhouettes.

Each of those brands has strong product development capabilities. For example, 90 percent of The Company Store's merchandise is proprietary, while at Domestications it is at 73 percent. The turnaround at Domestications has been well received so far under Farley Nachemin's direction, Shull added, and sourcing will be a key element of that in the future.

In addition, the Internet currently represents 20 percent of sales, he said, and it's on track to do more than $100 million in the future.

With the elimination of non-profitable businesses and facilities, Hanover Direct will also continue its brand extension. In April 2000, The Company Store launched Company Kids, which is ahead of plan by more than 30 percent, Shull said. "I think it can be a dominant player as it relates to kids."

It won't be the only catalog for that market, as Shull said that the company is planning to launch a catalog titled Baby Gump's later in the year.

The Gump's business, which just consolidated its retail and catalog divisions several months ago, will need another year or two to turn around, he said.

Hanover is also looking to expand distribution with the help of partnerships with Internet companies and plans to announce an affiliate program with a major Internet company within a few months.

In addition, Hanover will strengthen its balance sheet by selling or restructuring its facilities and leases. Shull also said that as of May 23, the 10-year lease on its facility in Maumelle, AR, is off the books, a $14 million liability. Other facility changes include the selling of the Kindig Lane, PA, building, and the consolidation of the call center in San Diego to other facilities.

"Turnaround is a three-year process," he said. "We're in year two … We're well on our way to rebuilding, and next year, we'll drive growth."

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