Hampshire Reports Second Quarter 2015 Results

NEW YORK–(BUSINESS WIRE)–Hampshire Group, Limited (OTC Markets:HAMP) (“Hampshire” or the
“Company”) today announced its results for the quarter and six months
ended June 27, 2015. The Company intends to report Hampshire’s results
for the third quarter of 2015 as soon as possible. Management expects to
resume a normal schedule of quarterly SEC filings and earnings
announcements after the remaining 2015 results are reported in the
coming months.

As previously reported, the Company sold all the stock of its
wholly-owned subsidiary, Rio Garment S.A., on September 15, 2015. In
accordance with GAAP, the results of operations of Rio Garment have been
presented as discontinued operations for the periods presented.

Second Quarter 2015 Compared to Second Quarter
2014:

• Sales were $12.2 million compared to $3.7 million.
• Gross profit margin was 24.2% compared to 20.1%.
• SG&A expenses were $4.3 million compared to $4.6 million.
• Adjusted EBITDA was a loss of $0.7 million compared to an Adjusted
  EBITDA loss of $3.2 million (see the Non-GAAP Reconciliation table in
  the Selected Unaudited Financial Data section of this news release).
• Income from continuing operations was $3.9 million, or $0.46 per
  diluted share, compared to a loss from continuing operations of $4.3
  million, or a loss of $0.50 per diluted share.
• Included in second quarter 2015 results was a pre-tax charge of $5.3
  million, and a pre-tax gain of $10.6 million primarily related to the
  amendment of Hampshire’s lease for its New York City corporate
  headquarters announced on June 18, 2015.

Second Quarter 2015 Business Overview

Sales for the second quarter of 2015 were significantly higher than the
prior year driven by an increase in Hampshire Brands’ volume coupled
with higher selling prices as a result of a change in sales mix. The
James Campbell brand, acquired in February 2014 contributed $3.3 million
in sales, up from $31,000 in the second quarter of 2014 reflecting the
successful integration of the business into Hampshire Group’s operations.

Gross profit was $2.9 million, up from $0.7 million in the second
quarter of 2014, of which approximately $0.8 million was driven by
higher average selling prices and sourcing synergies at Hampshire
Brands, and $1.3 million was generated through James Campbell.

Selling, general and administrative expenses decreased to $4.3 million
in the second quarter of 2015 from $4.6 million in the prior year
quarter, as a result of lower compensation expenses. SG&A as a
percentage of sales decreased to 35.4% in the second quarter of 2015
from 123.6% reflecting the higher sales level.

Cash Flow and Financial Position at June 27,
2015:

• The Company concluded the quarter ended June 27, 2015 with $0.7
  million in cash and cash equivalents as compared to $1.8 million as of
  December 31, 2014.
• Working capital deficit (excluding assets and liabilities held for
  sale) was $3.7 million at the conclusion of the quarter ended June 27,
  2015 from $9.7 million as of December 31, 2014.
• The Company had borrowings of $3.0 million on its term loan and $7.6
  million on its revolving credit facility.

About Hampshire Group

Hampshire Group, Limited (www.hamp.com),
along with its wholly-owned subsidiary, Hampshire Brands, Inc. is a
provider of fashion apparel across a broad range of product categories,
channels of distribution and price points. The Company specializes in
designing and marketing men’s sportswear to department stores, chain
stores and mass market retailers under licensed brands, our own
proprietary brands and the private labels of our customers.

Cautionary Disclosure Regarding Forward-Looking
Statements

This press release contains forward-looking statements, within the
meaning of the Private Securities Litigation Reform Act of 1995, that
reflect the Company’s current views with respect to future events. Such
statements are subject to certain risks and uncertainties which could
cause actual results to differ materially from those projected. Readers
are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date hereof. The Company
undertakes no obligation to publish revised forward-looking statements
to reflect events or circumstances after the date hereof or to reflect
the occurrences of unanticipated events. Readers are urged to review and
consider carefully the various disclosures made by the Company in its
Form 10-K and other Securities and Exchange Commission filings, which
advise interested parties of certain factors that affect the Company’s
business. Risks and uncertainties that could cause actual results to
differ materially from those anticipated in our forward looking
statements include, but are not limited to, the following: there is
doubt about our ability to continue as a going concern due to the
February 29, 2016 maturity date of our credit facility, potentially
insufficient liquidity, our history of losses, our stockholders’ deficit
and our auditor issuing a going concern opinion for the year ended
December 31, 2014; risks from the sale of Rio Garment S.A.; matters
related to our Audit Committee investigation; identified material
weaknesses in our internal controls; restricted ability to borrow under
our credit facility; a prolonged period of depressed consumer spending;
use of foreign suppliers for raw materials and manufacture of our
products; lack of an established public trading market for our common
stock; decreases in business from or the loss of any one of our key
customers; financial instability experienced by our customers;
chargebacks and margin support payments; loss of or inability to renew
certain licenses; change in consumer preferences and fashion trends,
which could negatively affect acceptance of our products by retailers
and consumers; failure of our manufacturers to use acceptable ethical
business practices; failure to deliver quality products in a timely
manner; problems with our distribution system and our ability to deliver
products; labor disruptions at ports, our suppliers, manufacturers or
distribution facilities; failure, inadequacy, interruption or security
lapse of our information technology; failure to compete successfully in
a highly competitive and fragmented industry; challenges integrating any
business we have acquired or may acquire; potential impairment of
acquired intangible assets; unanticipated expenses beyond the amount
reserved on our balance sheet or unanticipated cash payments related to
the ultimate resolution of income and other possible tax liabilities;
significant adverse changes to international trade regulations; loss of
certain key personnel which could negatively impact our ability to
manage our business; risks related to the global economic, political and
social conditions; fluctuation in the price of raw materials adversely
affecting our results of operations; energy and fuel costs are subject
to adverse fluctuations and volatility; and cyber security risks related
to breaches of security pertaining to sensitive company, customer,
employee and vendor information.

The Company believes that supplementing its financial statements
prepared in accordance with United States generally accepted accounting
principles (“GAAP) with certain non-GAAP financial measures, as defined
by the Securities and Exchange Commission (the “SEC”), provides a more
comprehensive understanding of the Company’s results of operations. Such
measures include EBITDA and Adjusted EBITDA and should not be considered
an alternative to GAAP financial measures, but instead should be read in
conjunction with the GAAP financial measures. Readers are urged to
review and consider carefully the various disclosures made by the
Company in its Form 10-K for the year ended December 31, 2014 and other
SEC filings, which advise interested parties of certain factors that may
affect the Company’s business.

Contacts

Company:
Hampshire Group
Benjamin C. Yogel, 561-409-0890
Lead
Director
byogel@mrccapital.com
or
Investor
Relations:
The Equity Group Inc.
Fred Buonocore,
212-836-9607
fbuonocore@equityny.com
www.theequitygroup.com