Hanover Direct is still in the midst of the restructuring it announced in January 2001. But it has restructured the restructuring somewhat. In a conference call to investors in March, Hanover brass said it no longer wishes to sell its International Male apparel catalog. That title, along with home products catalog Improvements, upscale gifts book Gump’s by Mail, and the Gump’s store in San Francisco, was up for sale last year.
“We’re looking toward turning around the International Male business and restructuring it over the course of this year,” says executive vice president/chief financial officer Ed Lambert. And he’s open about the reason for the change of heart: “With the kinds of prices we were getting for International Male, we were better off running it ourselves rather than selling it.”
Still seeking a buyer for Gump’s
Weehawken, NJ-based Hanover sold the Improvements catalog to home shopping network HSN for $33.4 million in June. And it continues to shop around the Gump’s catalog and store.
Unlike International Male (and its sister catalog, men’s underwear title Undergear), “Gump’s doesn’t fit in with Hanover’s other titles,” says Craig Battle, managing director of Princeton, NJ-based Tucker Capital. The data cards for Hanover’s Domestications and The Company Store home decor catalogs describe the core customer as 35-54 years old, with a median income of $73,000-$75,000. In contrast, the average Gump’s customer is 55 years old and has income of more than $80,000.
For his part, Battle thinks Gump’s would be a strategic acquisition for a deep-pocketed retailer, particularly one that caters to more-affluent consumers.
Hanover counts as its core brands Domestications, The Company Store, and plus-size women’s apparel book Silhouettes. The company discontinued the Domestications Kitchen & Garden, Encore, and Kitchen & Home catalogs in January 2001 and shuttered its high-end bedding book Turiya in 2000.
The discontinuation of those titles accounted for a $21.2 million reduction in sales in 2001; the sale of Improvements led to another $27.6 million reduction. All told, Hanover’s annual revenue fell nearly 12% last year, to $532.2 million from $603.0 million in 2000. But sales from its three core brands rose 1%, while Internet sales rose roughly 30%.
What’s more, Hanover slashed its net loss from $80.8 million in 2000 to $5.8 million last year. Overall, Hanover credits the $75.0 million bottom-line improvement to decreased general and administrative expenses; gains on the sale of Improvements and a facility in Hanover, PA; decreased cost of sales and operating expenses; decreased special charges related to the company’s strategic business realignment program; and a reduction in interest expense. The company eliminated 800 positions during 2001, reducing payroll by $39 million.
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