Big Dog -I am watching you

Big Dog Holdings, Inc. Reports 4th Quarter and 2005 Year Sales and Earnings and Recent Events SANTA BARBARA, CA, Mar 29, 2006 (MARKET WIRE via COMTEX) -- Big Dog Holdings, Inc. (NASDAQ: BDOG); www.bigdogs.com, www.thewalkingcompany.com, a developer and retailer of branded, lifestyle consumer products, today reported the financial results for the fourth quarter and year ended December 31, 2005.As previously announced, consolidated net sales for the fourth quarter were $59.4 million, a 6.6% increase as compared to $55.7 million in the same quarter of 2004. Our consolidated net sales increased primarily due to the additional stores opened during the period and a 23% increase in mail order/Internet revenue of $.6 million, offset by a comparative store sales decrease of .6% (the Big Dogs chain had a comparative store sales decrease of 6.6% while TWC has a comparative store sale increase of 7.0%). The Company had a total of 268 stores opened (176 Big Dog stores and 92 Walking Company stores) at the end of the period, as compared with 188 Big Dog stores and 74 TWC stores on December 31, 2004. Consolidated net sales for the year ended December 31, 2005 were $179.1 million, an 11.0% increase, as compared to $161.4 million in 2004. Comparable retail store sales increased 3.3% for the year (4.1% decline for the Big Dogs chain and 12.8% increase for the TWC chain.)Consolidated earnings were $.38 per share for the fourth quarter 2005, as compared to $.43 per share earned for the same period in 2004. Consolidated earnings for the year ended December 31, 2005 were $.49 per share, as compared to $.40 per share in 2004. Consolidated net income was $3.6 million and $4.7 million for the fourth quarter and year 2005, respectively, as compared to $4.1 million and $3.7 million for the same periods in 2004. For the quarter ended December 31, 2005, the Company's gross margins for the fourth quarter were 54.9% in 2005 as compared to 55.5% for the same period in 2004. The decline in gross margin was the result of a one time pick up at TWC in 2004 and a shift in business from Big Dogs to TWC. Gross margins for the year ended 2005 were 55.2% compared to 54.9% for 2004. Consolidated operating expenses were 44.4% and 50.4% of sales for the fourth quarter and year ended 2005, respectively, as compared to 43.2% and 50.8%, respectively, for 2004. Higher operating expenses in 2005 reflect the smaller Big Dog store chain among other expenses.Commenting on the 2005 results and looking towards 2006, CEO Andrew Feshbach stated, "We are pleased with our overall results for 2005. We have integrated the Footwork's acquisition and see positive comp sales at these stores, we completed our new store design for TWC and it is now ready to be rolled out across the country and we have invested in our infrastructure to support our future growth. Although our net income declined in the 4th quarter, we see this decline largely as a result of non-recurring type events as well as revenue declines at the Big Dog chain. We are excited about our future prospects as we look toward 2006 and beyond. With the acquisition of Steve's Shoes, we believe we will end the year at approximately 150 TWC stores as compared to 92 at the end of 2005. We also will have approximately 150 Big Dog stores at the end of the year. The acquisition of the Steve's chain was on a good financial basis but it was operationally distressed when we acquired it. We believe we will have it stabilized and integrated into the TWC chain. At Big Dogs we continue to work to unlock the value of our brand through management of our current channel strategy. Regarding sales for the first 6 months of the year, we see similar trends for both divisions as occurred in the fourth quarter for 2005."Big Dog Holdings, Inc. consists of Big Dogs and The Walking Company. Big Dogs develops, markets and retails a branded, lifestyle collection of unique, high-quality, popular-priced consumer products, including activewear, casual sportswear, accessories and gifts. The BIG DOGS(R) brand image is one of quality, value and fun. The BIG DOGS(R) brand is designed to appeal to people of all ages and demographics, particularly baby boomers and their kids, big and tall customers, and pet owners. In addition to its 167 retail stores, Big Dogs markets its products through its catalog and Internet. The Walking Company is the leading specialty retailer of high-quality, technically designed comfort shoes and accessories that features premium brands such as ECCO, Mephisto, Dansko and Merrell, among many others. These products have particular appeal to one of the largest and most rapidly growing demographics in the nation. The Walking Company operates 130 stores in premium malls across the nation.Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995-This press release contains forward-looking statements that involve risks and uncertainties. The statements contained in this press release that are not purely historical are forward-looking statements, including without limitation statements regarding our expectations, beliefs, intentions or strategies. The factors that may affect the outcome of such forward-looking statements include (i) changes in consumer preferences, (ii) factors affecting store traffic, (iii) competition from other companies, and (iv) the ability to retain key personnel. Further information on the Company's risk factors is contained in the Company's quarterly and annual reports as filed with the Securities and Exchange Commission.BIG DOG HOLDINGS, INC. AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETSDecember 31,---------------------------2005 2004------------ ------------ASSETSCURRENT ASSETS:Cash and cash equivalents $ 3,530,000 $ 4,670,000Receivables, net 894,000 411,000Inventories 44,518,000 39,581,000Prepaid expenses and other current assets 1,046,000 928,000Deferred income taxes 1,681,000 1,691,000------------ ------------Total current assets 51,669,000 47,281,000PROPERTY AND EQUIPMENT, Net 11,931,000 9,956,000INTANGIBLE ASSETS, Net 4,473,000 172,000GOODWILL 3,131,000 -DEFERRED INCOME TAXES 1,187,000 1,042,000OTHER ASSETS 362,000 380,000------------ ------------TOTAL $ 72,753,000 $ 58,831,000============ ============LIABILITIES AND STOCKHOLDERS' EQUITYCURRENT LIABILITIES:Short-term borrowings $ 2,796,000 $ 304,000Current portion of long-term debt 1,775,000 243,000Accounts payable 7,478,000 5,033,000Income taxes payable 1,367,000 2,643,000Accrued expenses and other currentliabilities 6,615,000 6,331,000------------ ------------Total current liabilities 20,031,000 14,554,000NOTES PAYABLE 4,565,000 289,000CAPITAL LEASE OBLIGATIONS 47,000 256,000DEFERRED RENT AND LEASE INCENTIVES 1,468,000 943,000DEFERRED GAIN ON SALE-LEASEBACK 195,000 248,000------------ ------------Total liabilities 26,306,000 16,290,000STOCKHOLDERS' EQUITY 46,447,000 42,541,000------------ ------------TOTAL $ 72,753,000 $ 58,831,000============ ============BIG DOG HOLDINGS, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF OPERATIONSThree Months Ended Year EndedDecember 31, December 31,-------------------------- --------------------------2005 2004 2005 2004------------ ------------ ------------ ------------NET SALES $ 59,420,000 $ 55,739,000 $179,115,000 $161,358,000COST OF GOODS SOLD 26,809,000 24,799,000 80,311,000 72,733,000------------ ------------ ------------ ------------GROSS PROFIT 32,611,000 30,940,000 98,804,000 88,625,000------------ ------------ ------------ ------------OPERATING EXPENSES:Selling, marketingand distribution 22,975,000 21,585,000 80,624,000 73,956,000General andadministrative 3,395,000 2,516,000 9,631,000 8,060,000------------ ------------ ------------ ------------Total operatingexpenses 26,370,000 24,101,000 90,255,000 82,016,000------------ ------------ ------------ ------------INCOME FROMOPERATIONS 6,241,000 6,839,000 8,549,000 6,609,000OTHER INCOME - - - 82,000INTEREST INCOME 2,000 1,000 44,000 26,000INTEREST EXPENSE (358,000) (238,000) (976,000) (857,000)------------ ------------ ------------ ------------INCOME BEFOREPROVISIONFOR INCOME TAXES 5,885,000 6,602,000 7,617,000 5,860,000PROVISION FOR INCOMETAXES 2,236,000 2,453,000 2,894,000 2,172,000------------ ------------ ------------ ------------NET INCOME $ 3,649,000 $ 4,149,000 $ 4,723,000 $ 3,688,000============ ============ ============ ============NET INCOME PER SHAREBASIC $ 0.40 $ 0.45 $ 0.52 $ 0.42============ ============ ============ ============DILUTED $ 0.38 $ 0.43 $ 0.49 $ 0.40============ ============ ============ ============WEIGHTED AVERAGESHARES OUTSTANDING:BASIC 9,075,000 9,178,000 9,145,000 8,722,000============ ============ ============ ============DILUTED 9,664,000 9,732,000 9,726,000 9,174,000============ ============ ============ ============Big Dog Holdings, Inc.121 Gray AvenueSanta Barbara, California 93101www.bigdogs.com www.thewalkingcompany.comCONTACT:Alexis DilgInvestor Information(805) 963-8727, extension 1360Contact via www.marketwire.com/mw/emailprcntct?id=B2B11759A4A75600SOURCE: Big Dog Holdings, Inc.CONTACT: www.bigdogs.comhttp://www.thewalkingcompany.comCopyright 2006 Market Wire, All rights reserved.**************************************************As of Saturday, 03-25-2006 23:59, the latest Comtex SmarTrend(SM) Alert, an automated pattern recognition system, indicated an UPTREND on 08-25-2005 for BDOG @ $7.05.(C) 2006 Comtex News Network, Inc. All rights reserved.SUBJECT CODE: Retail:ApparelRetail:AppliancesRetail:Consumer ElectronicsRetail:Cosmetics and AccessoriesRetail:E-CommerceRetail:Furniture and FurnishingsRetail:SupermarketsRetail:Consumer Interest