E-commerce Spending Widens Hanover Loss
First-quarter losses more than tripled at cataloger and Internet fulfillment outsourcer Hanover Direct, largely due to the company's investment in e-commerce services. The net loss for the quarter was $13.4 million, or 6 cents per share, compared to a net loss of $4.2 million, or 2 cents per share, during the same period last year, the company says.
"We continue to transform Hanover Direct into a recognized leader in all aspects of e-commerce," says Rakesh K. Kaul, president and CEO of Hanover Direct. "Our first quarter results reflect the aggressive short-term spending for capacity, technology and resources necessary to realize this strategic objective, and the reported loss was in line with our internal plan.''
For the first quarter, Hanover Direct reported revenue of $130.1 million, compared to $127.7 million for the same period last year, up 1.9%.
Hanover's Keystone Internet Services, a unit of its business-to-business e-commerce subsidiary known as erizon, reported revenues of $6.5 million for the first quarter, compared to $700,000 for the same period last year, up 829%. The company attributed the increase to more clients, as well as new services in order processing, customer care, shipping and distribution. erizon ended the quarter with a loss of $7.8 million, compared to $3.6 million in the first quarter 1999, due to spending on systems development and upgrades to its computer systems, as well as higher consulting and rental expenses. Erizon also opened a 17,000 square-foot facility in Edgewater, N.J., to house 60 employees involved in Internet production, design and development , as well as marketing.
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