NEW YORK — Hanover Direct Inc., the catalog and e-commerce firm, has instituted a restructuring plan that will significantly reduce the company’s workforce, shutter secondary businesses and focus on core brands.
Wall Street reacted to the news Friday by pushing shares of the company up 50 percent to 56 cents in American Stock Exchange trading.
Tom Shull, who joined Hanover as president and chief executive last month, noted in a statement that the actions would “direct the company’s resources primarily toward continued profitable growth in Hanover Brands, such as The Company Store, Domestications, Improvements and Silhouette brands, while reducing costs in all areas of the business.”
Elements of the plan include:
The elimination of 285 positions, approximately 11 percent of its workforce, across all business channels, creating a $8.6 million charge in the year ended Dec. 30. The annual savings from the reductions will amount to $26 million, according to the company.
Closure of its Always In Style business, a consumer service Web site that provided style advice and recommendations, resulting in an asset write-down of $500,000 in the fourth quarter.
Closing its Maumelle, Ark., fulfillment and telemarketing center and consolidating its Keystone activities in Hanover, Pa., creating a noncash charge of $5.4 million during the quarter.
Other actions include the shuttering of its underperforming Turiya, Kitchen & Home and Kitchen & Garden catalogs, with some products moved into continuing catalogs, as well as the termination of its Compagnie de la Chine marketing agreement and the closure of certain retail outlets. The latter actions will result in a nonpersonnel charge of $3.9 million, to be recorded in the fourth quarter. Additionally, the Desius business will be discontinued.
In a statement, Shull said Hanover “will continue to investigate both internal and external opportunities to further reduce costs, improve cash flow and maximize shareholder value,” he said.