Hanover Direct Inc announced that it reported a net loss of approximately $1.8 million applicable to common shareholders for first fiscal quarter ended April 1, 2006, compared to net income applicable to common shareholders of approximately $3.1 million for same period last year.
Net revenues for first fiscal quarter of 2006 were $100.3 million, compared to net revenues of $89.7 million for same period last year.
The 2005 results included a gain from discontinued operations from sale of Gump's in March 2005 of $3.0 million (including a $3.6 million gain recognized on the sale).
The increase in net revenues was primarily driven by an increase in catalog circulation levels and higher response rates. In addition, net revenues grew because of higher postage and handling rates, which we put into effect to offset an increase in US Postal Service rates that occured in early January 2006.
These increases were partially offset by lower average order sizes. We experienced higher demand in our Domestications and Silhouettes catalogs, and lower demand in The Company Store and the International Male catalogs.
The principal factors which negatively impacted the operating results for first quarter of 2006 included the lower demand in The Company Store, the continuation of diminished productivity in our distribution center which started in the Fall of 2005 has led to higher product fulfillment costs, higher catalog postage costs due to postal rate increase and higher catalog paper costs which started in the Fall of 2005.
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