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Internet powering Hanover growth

Retail Editor 4, Andrea Lillo -- Home Textiles Today, March 31, 2003

The Internet business continues its growth surge at Hanover Direct, seeing 30 percent growth last year, or about 20 percent of sales for the company.

The company expects to see more significant growth in the future as it continues to work with third-party companies such as Amazon.com, and as more customers migrate to shopping online.

"We want to shift as the customers shifts to the Internet," said Ed Lambert, evp and cfo. "Our brands are strong, and they're doing very well; but this is a change in the customer behavior."

Tom Shull, chairman and ceo, added, "Imagine what our Internet business would be if it wasn't a soft economy? Maybe 40 percent to 50 percent of our business." He also said that recent experience shows most new customers prefer to shop on the Internet.

Catalog circulation decreased 9 percent last year as a result of restructuring, executives said, and also reflect the economy and the growing Internet business.

Shull said that the two books that were its biggest challenges two years ago were Domestications and Gumps by Mail. Domestications, however, has since stabilized. Though, like such competitors as JCPenney and Brylane, it's suffering from competitive pressures and the soft economy.

Gump's By Mail lacked a consistent image, but now that it merged with the Gump's retail division it is one-year away from profitability, Shull added.

One of its core businesses, The Company Store, is a strong brand, though it lacks focus and scale, Shull said. Competitor Lands' End "is highly focused with a lot of scale and more than $1.3 billion in sales. The Company Store has the promise for that, and it's one reason we combined The Company Store and Domestications together, to get that scale in the home segment, and it appears to be working very, very well."

Together, the brands generate $300 million in sales — a very strong and promising story, Shull said. But combined with the other brands, "the story is not as strong."

Lambert also mentioned that Hanover is no longer actively looking to sell Gump's or International Male because of the soft mergers and acquisitions market.

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