Hanover Direct Reports Improvement in Fiscal 2003 Results from Operations of $6.5 Million Over Prior Year and the Restatement of

Hanover Direct Reports Improvement in Fiscal 2003 Results from
Operations of $6.5 Million Over Prior Year and the Restatement of its 2002 10-K



EDGEWATER, N.J., April 9  /PRNewswire-FirstCall/ -- Hanover Direct, Inc. today
announced operating results for the 52-weeks ended December 27, 2003.

The Company reported income from operations of $6.1 million for the year ended
December 27, 2003 compared with a $0.4 million loss for the year ended December
28, 2002.  The improvement in income from operations was achieved through
reductions in special charges, general and administrative expenses and
depreciation and amortization.

The Company reported that Internet sales continue to demonstrate strong growth
over the prior year, reaching 27.9% of total revenues for the 52-week period
ended December 27, 2003.  Internet net revenues for the 52-week period ended
December 27, 2003 were $108.6 million, or 24.2% above the comparable fiscal
period in 2002.  Total net revenues for the 52-weeks ended December 27, 2003
were $414.8 million, a decrease of $42.8 million (9.4%), from the comparable
period in 2002.  The decrease was due to a number of factors, including softness
in the economy and demand for the Company's products during the firstsix months
of the 2003 year.  In addition, the Company's strategy of reducing unprofitable
circulation also contributed to the decrease throughout the year.

The Company reported a net loss of $15.4 million or $0.16 per share for the year
ended December 27, 2003, compared with a net loss of $9.1 million or $0.18 per
share for the comparable period in the 2002 fiscal year.  The per share amounts
were calculated after deducting preferred dividends and accretion of $7.9
million and $15.6 million in fiscal years 2003 and 2002, respectively.  The
weighted average number of shares of common stock outstanding was 144,387,672
and 138,280,196 for the fiscal years ended December 27, 2003 and December 28,
2002, respectively.  The increase in weighted average number of shares was a
result of the Chelsey Recapitalization consummated on November 30, 2003.

The $6.3 million increase in net loss was primarily due to:

(i) a $7.6 million deferred Federal income tax provision incurred during 2003 to
increase the valuation allowance and fully reserve the remaining net deferred
tax asset.  Due to a number of factors, including the continued softness in the
demand for the Company's products, management lowered its projections of future
taxable income.  As a result of lower projections of future taxable income, the
future utilization of the Company's net operating losses were no longer
"more-likely-than-not" to be achieved;

(ii) $7.2 million of additional interest expense incurred on the Series B
Preferred Stock as a result of the implementation of FAS 150.  Effective June
29, 2003, FAS 150 required the Company to reclassify its Series B Preferred
Stock as a liability and reflect the accretion of the preferred stock balance as
interest expense;

(iii) a $3.6 million decrease due to loss of variable contribution associated
with declines in net revenues;

(iv) a $3.3 million increase due to a favorable summary judgment ruling at the
District Court level in the Kaul litigation, resulting in a reversal of a
substantial portion of the loss reserve related to this litigation;

(v) a $3.1 million increase due to the reduction of special charges recorded;

(vi) a $2.8 million increase due to continued reductions in cost of sales and
operating expenses, general and administrative expenses and a decrease in
depreciation and amortization;

(vii) an increase of $1.3 million due to the recognition of the deferred gain
related to the June 29, 2001 sale of the Company's Improvements business; and

(viii) a $1.6 million benefit due to the implementation of the Company's revised
vacation and sick benefit policy.

The Company filed an amendment to the Annual Report on Form 10-K for the year
ended December 28, 2002 as well as an amendment to the Quarterly Report on Form
10-Q for the quarter ended September 27, 2003.  The Company has re-examined the
provisions of the Congress Credit Facility and, based on EITF Issue No. 95-22,
"Balance Sheet Classification of Borrowings Outstanding under Revolving Credit
Agreements that Include Both a Subjective Acceleration Clause and a Lock-Box
Arrangement," and certain provisions in the credit agreement, the Company is
required to reclassify its revolving credit facility from long-term to
short-term debt, though the existing revolving loan facility does not mature
until January 31, 2007.  As a result, the Company has reclassified $8.8 million
as of December 28, 2002 and $13.2 million as of September 27, 2003 from
Long-term debt to Short-term debt and capital lease obligations thatis
classified as Current liabilities.

A conference call with the management of Hanover Direct, Inc. to review the
Fiscal Year 2003 operating results will be held on Tuesday, April 13, 2004 at
2:00 p.m. Eastern Daylight Time.  If you would like to participate in the call,
please call 877-691-0878 (Domestic) and 973-582-2741 (International) between
1:50 p.m. and 1:55 p.m. Eastern Daylight Time.  The call will begin promptly at
2:00 p.m. Eastern Daylight Time.  A re-play of the conference will be available
from 5:00 p.m. Eastern Daylight Time on Tuesday, April 13, 2004 until 5:00 p.m.
Eastern Daylight Time on Wednesday, April 14, 2004 and can be accessed by
calling 877-519-4471 (Domestic) and 973-341-3080 (International) and entering
the Reservation No.: 4685907.

The Hanover Direct, Inc. 2004 Annual Shareholders Meeting has been scheduled for
Thursday, June 3, 2004.  The meeting will be held at the Sheraton Suites on
Hudson, located at 500 Harbor Boulevard, Weehawken, NJ, and will commence at
9:30a.m. Eastern Daylight Time.  The record date for shareholders entitled to
vote at the Annual Meeting is the close of business on April 19, 2004.

About Hanover Direct, Inc.

Hanover Direct, Inc. (AMEX:HNV) and its business units provide quality, branded
merchandise through a portfolio of catalogs and e-commerce platforms to
consumers, as well as a comprehensive range of Internet, e-commerce, and
fulfillment services to businesses. The Company's catalog and Internet portfolio
of home fashions, appareland gift brands include Domestications, The Company
Store, Company Kids, Silhouettes, International Male, Scandia Down, and Gump's
By Mail. The Company owns Gump's, a retail store based in San Francisco. Each
brand can be accessed on the Internet individually by name. Keystone Internet
Services, LLC (http://www.keystoneinternet.com/), the Company's third party
fulfillment operation, also provides the logistical, IT and fulfillment needs of
the Company's catalogs and web sites.  Information on HanoverDirect, including
each of its subsidiaries, can be accessed on the Internet at
http://www.hanoverdirect.com/.

                  HANOVER DIRECT, INC. AND SUBSIDIARIES
                  CONDENSED CONSOLIDATED BALANCE SHEETS
             (In thousands ofdollars, except share amounts)

                                                                As Restated
                                                   December 27, December 28,
                                                        2003       2002
                        ASSETS
  CURRENT ASSETS:
      Cash and cash equivalents                        $2,282         $785
      Accounts receivable, net                         14,335       16,945
      Inventories                              41,576       53,131
      Prepaid catalog costs                            11,808       13,459
      Other current assets                              3,951        3,967
         Total Current Assets                          73,952       88,287

  PROPERTY AND EQUIPMENT, AT COST:
       Land                                             4,361        4,395
       Buildings and building improvements             18,210       18,205
       Leasehold improvements                          10,108      9,915
       Furniture, fixtures and equipment               53,212       56,094
                                                       85,891       88,609

       Accumulated depreciation and amortization      (58,113)     (59,376)
         Property and equipment, net                   27,778       29,233
  Goodwill, net                                         9,278        9,278
  Deferred tax assets                                   2,213       12,400

  Other non-current assets                   1,575          902
         Total Assets                                $114,796     $140,100


      LIABILITIES AND SHAREHOLDERS' DEFICIENCY

  CURRENT LIABILITIES:
       Short-term debt and capital lease
        obligations               $13,468      $12,621
       Accounts payable                                41,880       42,873
       Accrued liabilities                             12,918       26,351
       Customer prepayments and credit                  5,485 4,722
       Deferred tax liability                           2,213        1,100
         Total Current Liabilities                     75,964       87,667
  NON-CURRENT LIABILITIES:
       Long-term debt                                   9,042  12,508
       Series C Participating Preferred Stock,
        authorized, issued and outstanding 564,819
        shares at December 27, 2003; liquidation
        preference of $56,482 at December 27, 2003     72,689           --
       Other       4,609        6,387
         Total Non-current Liabilities                 86,340       18,895
         Total Liabilities                            162,304      106,562
  SERIES B PARTICIPATING PREFERRED STOCK,
   authorized, issued and outstanding 1,622,111
   shares at December 28, 2002                             --       92,379
  SHAREHOLDERS' DEFICIENCY:
       Common Stock, $.66 2/3 par value,
       authorized 300,000,000 shares;
       222,294,562 shares issued and outstanding
       at December 27, 2003 and  140,336,729 shares
       issued and outstanding at December 28, 2002    148,197       93,625
       Capital in excess of par value                 302,432      337,507
       Accumulated deficit    (494,791)    (486,627)
                                                      (44,162)     (55,495)
  Less:
       Treasury stock, at cost (2,120,929 shares
       at December 27, 2003 and December 28, 2002)     (2,996)      (2,996)
       Notes receivable from sale of Common Stock        (350)        (350)
         Total Shareholders' Deficiency               (47,508)     (58,841)
         Total Liabilities and Shareholders'
          Deficiency                                 $114,796     $140,100


                  HANOVER DIRECT, INC. AND SUBSIDIARIES
            CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
           (In thousands of dollars, except per share amounts)

                               For the 13-WeeksEnded For the 52-Weeks Ended
                                  December   December   December  December
                                     27,        28,        27,        28,
                                    2003       2002       2003       2002

  NET REVENUES                    110,002    128,251    414,874    457,644

  OPERATING COSTS AND EXPENSES:
       Cost of sales and
        operating expenses         66,757     80,152    261,118    290,531
       Special charges                627   2,702      1,308      4,398
       Selling expenses            25,444     28,685     99,543    105,239
       General and
        administrative expenses    11,223     15,452     42,080     52,258
       Depreciation and
        amortization         1,330      1,274      4,719      5,650
                                  105,381    128,265    408,768    458,076

  INCOME (LOSS) FROM OPERATIONS     4,621        (14)     6,106       (432)
       Gain on sale of Improvement     --       (252)  (1,911)      (570)

  INCOME (LOSS) BEFORE INTEREST AND
   INCOME TAXES                     4,621        238      8,017        138
       Interest expense, net        4,246      1,461     12,088      5,477

  INCOME (LOSS) BEFORE INCOME TAXES   375   (1,223)    (4,071)    (5,339)
       Provision for deferred
        Federal income taxes           --      3,700     11,300      3,700
       Provision for state income
        taxes                          11          1         28         91

  NET INCOME (LOSS) AND
   COMPREHENSIVE INCOME (LOSS)        364     (4,924)   (15,399)    (9,130)
       Preferred stock dividends
        and accretion                  --      4,964      7,922     15,556

  NET INCOME (LOSS) APPLICABLE TO
   COMMON SHAREHOLDERS               $364    $(9,888)  $(23,321)  $(24,686)

  NET INCOME (LOSS) PER COMMON SHARE:
       Net income (loss) per common
        share - basic and diluted    $.00      $(.07)     $(.16)     $(.18)
       Weighted average common
        shares outstanding basic
        and diluted (thousands)   162,603    138,316    144,388    138,280


                  HANOVER DIRECT, INC. AND SUBSIDIARIES
             CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                        (In thousandsof dollars)

                                                      For the 52-Weeks Ended
                                                          Dec. 27,  Dec. 28,
                                                             2003      2002
  CASH FLOWS FROM OPERATING ACTIVITIES:

  Net loss                                                 (15,399)  (9,130)
  Adjustments to reconcile net loss to net cash
   provided by operating activities:
    Depreciation and amortization, including deferred fees 5,715    7,203
    Provision for doubtful accounts                            378      304
    Special charges                                             16       18
    Deferred tax asset                                      11,300    3,700
    Gainon the sale of Improvements                        (1,911)    (570)
    Gain on the sale of property and equipment                  (4)    (167)
    Interest expense related to Series B Participating
    Preferred Stock redemption price increase       7,235       --
    Compensation expense related to stock options            1,141    1,332
    Changes in assets and liabilities:
  Accounts receivable                                        2,232    2,207
    Inventories                       11,555    6,092
    Prepaid catalog costs                                    1,651    1,161
    Accounts payable                                          (993)  (3,475)
    Accrued liabilities                                    (13,433)   1,219
    Customer prepayments and credits                           763     (421)
    Other, net                                              (2,173)  (4,814)
  Net cash provided by operating activities                  8,073    4,659
  CASH FLOWS FROM INVESTING ACTIVITIES:
    Acquisitions of property and equipment                  (1,895)    (639)
    Proceeds from sale of Improvements                       2,000      570
    Costs related to the early release of escrow funds         (89)  --
    Proceeds from disposal of property and equipment            78      169
  Net cash provided by investing activities                     94      100
  CASH FLOWS FROM FINANCING ACTIVITIES:
    Net borrowings (payments) under Congress revolving
     loan facility                                             179   (4,704)
    Borrowings under Congress Tranche B term loan facility      --    3,500
    Payments under Congress Tranche A term loan facility    (1,991)  (1,991)
    Payments under Congress Tranche B term loan facility    (1,800)  (1,314)
    Payments of capital lease obligations                     (466)    (104)
    Payments of debt issuance costs                           (910)    (722)
    Payment of Series C Participating Preferred Stock
     issuance costs                                         (1,334)
    Proceeds from issuance of common stock                      --       25
    Series B Participating Preferred Stock Transaction
     Cost Adjustment                        --      215
    Payment of estimated Richemont tax obligation on
     Series B Participating Preferred Stock accretion         (347)      --
    Other, net                                                  (1)
  Net cash used by financing activities                     (6,670)  (5,095)
  Net increase (decrease) in cash and cash equivalents       1,497     (336)
  Cash and cash equivalents at the beginning of the year       785    1,121
  Cash and cash equivalents at the end of the period        $2,282     $785

  Supplemental Disclosures of Cash Flow Information:
  Cash paid for:
    Interest                                                $3,325   $3,405
    Income taxes                                               705      193
 Non-cash investing and financing activities:
    Series B Participating Preferred Stock redemption
     price increase                                         $7,575  $15,556
    Redemption of Series B Participating Preferred Stock   107,536
    Issuance of Series C Participating Preferred Stock      72,689
    Gain on issuance of Series C Participating Preferred
     Stock                                                  13,867
    Tandem share expirations                                            55
    Capital lease obligations                                1,459       32


DATASOURCE: Hanover Direct, Inc.



CONTACT:  Charles E. Blue, S.V.P. & Chief Financial Officer, of Hanover

Direct, Inc., [phone]; or Rich Tauberman of The MWW Group,

[phone], for Hanover Direct, Inc.



Web site:  http://www.hanoverdirect.com/ 

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