For Further Information:
Big Dog Holdings, Inc.
121 Gray Avenue
Santa Barbara, California 93101
www.bigdogs.com
www.walkingco.com
CONTACT:
Laura Russell
Investor Information
(805) 963-8727, ext. 1360
laurar@bigdogs.com
For Immediate Release:
November 9, 2004
Big Dog Holdings, Inc. Announces Third Quarter 2004 Financial Results
Santa Barbara, California - November 9, 2004... 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 third quarter ended September 30, 2004. The results for the third quarter
include assets and operations of The Walking Company ("TWC") which business was
acquired on March 3, 2004. TWC is the leading specialty retailer of
high-quality, technically designed comfort shoes and accessories.
For the quarter ended September 30, 2004, consolidated net sales were
$42,695,000 as compared with $29,487,000 in the third quarter 2003. Our
consolidated net sales increased 45%, primarily due to the addition of
approximately $16 million of revenue from our new TWC operations. The Company
had a total of 261 stores opened (188 Big Dog stores and 73 Walking Company
stores) at the end of the period, as compared with 198 Big Dogs stores on
September 30, 2003. Comparative store sales declined 0.7% for the quarter (7.1%
decline for the Big Dogs chain and 12.2% increase for the TWC chain.)
Consolidated gross profit increased to $23,433,000 in the third quarter 2004 as
compared with $16,829,000 in the third quarter 2003. The increase in
consolidated gross profit is the result of contributions from TWC. Big Dogs'
gross margin for the period increased to 58.0%, as compared to last year's
margin of 57.1%, and the gross margin for the TWC chain was 49.7%.
Consolidated operating expenses in the third quarter 2004 were $21,174,000, or
49.6% of consolidated net sales, compared to $13,579,000 or 46.1% in 2003.
Operating expenses grew as a percentage of sales primarily as a result of the
negative operating leverage associated with seasonally low sales at TWC and the
decrease in revenue at Big Dogs. The consolidated net income decreased to
$1,284,000 in 2004 as compared to $1,947,000 for the third quarter 2003. Fully
diluted net income per share decreased to $.13 per share as compared with $.24
per share last year due to the decrease in consolidated net income and
approximately 20% increase in the number of fully diluted shares outstanding
this quarter.
Andrew Feshbach, Chief Executive Officer, stated, "We are very pleased with the
advances we have made to date regarding the turnaround and integration of the
Walking Company. The third quarter saw a substantial amount of progress in
bringing those efforts to a conclusion. Our earnings declined primarily as a
result of a drop in sales in August at the Big Dog chain and as a result of the
negative operating leverage. Traffic in our malls declined sharply, possibly as
a result of high gas prices, reduced tourism, severe weather in the Southeast or
other variables. Sales have gotten off to an excellent start in the 4th quarter
and we look forward to a good holiday selling season."
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 188 retail stores, Big Dogs
markets its products through its catalog, internet and corporate sales accounts.
The Walking Company is a leading independent specialty retailer of high quality,
technically designed comfort shoes and accessories that features premium brands
such as ECCO, Mephisto, Dansko, Birkenstock 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 73 stores in premium
malls across the nation.
Safe Harbor Statement Under the Private Securities Litigation Reform Act of
1995- With the exception of historical information, the matters discussed in
this press release are forward looking statements that involve a number of risks
and uncertainties. The actual future sales and other results of the Company
could differ significantly from those statements. 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 SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS (Unaudited)
September 30,
----------------------------------------
2004 2003
------------------ -------------------
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $2,330,000 $576,000
Account receivable, net 403,000 257,000
Inventories 51,791,000 33,319,000
Prepaid expenses and other
current assets 1,214,000 1,238,000
Deferred income taxes 1,287,000 960,000
------------------ -------------------
Total current assets 57,025,000 36,350,000
PROPERTY AND EQUIPMENT, Net 10,520,000 4,404,000
INTANGIBLE ASSETS, Net 172,000 115,000
DEFERRED INCOME TAXES 1,292,000 968,000
OTHER ASSETS 420,000 285,000
------------------ -------------------
TOTAL $69,429,000 $ 42,122,000
================== ===================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Short-term borrowings $15,628,000 $ 2,873,000
Accounts payable 7,720,000 4,397,000
Income taxes payable 452,000
Accrued expenses and other current liabilities 5,235,000 2,579,000
------------------ -------------------
Total current liabilities 29,035,000 9,849,000
NOTES PAYABLE 530,000 ---
CAPITAL LEASE OBLIGATIONS 298,000 ---
DEFERRED RENT 953,000 627,000
DEFERRED GAIN ON SALE-LEASEBACK 261,000 314,000
------------------ -------------------
Total liabilities 31,077,000 10,790,000
STOCKHOLDERS' EQUITY 38,352,000 31,332,000
------------------ -------------------
TOTAL $69,429,000 $ 42,122,000
================== ===================
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
---------------------------------- --------------------------------
2004 2003 2004 2003
-------------- ---------------- -------------- -------------
NET SALES $ 42,695,000 $ 29,487,000 $105,619,000 $69,049,000
COST OF GOODS SOLD 19,262,000 12,658,000 47,934,000 29,899,000
------------- ---------------- -------------- -------------
GROSS PROFIT 23,433,000 16,829,000 57,685,000 39,150,000
------------- ---------------- -------------- -------------
OPERATING EXPENSES:
Selling, marketing and distribution 19,363,000 12,390,000 52,371,000 35,584,000
General and administrative 1,811,000 1,189,000 5,544,000 3,723,000
------------- ---------------- -------------- -------------
Total operating expenses 21,174,000 13,579,000 57,915,000 39,307,000
------------- ---------------- -------------- -------------
INCOME (LOSS) FROM OPERATIONS 2,259,000 3,250,000 (230,000) (157,000)
OTHER INCOME - - 82,000 1,000
INTEREST EXPENSE, NET (187,000) ( 75,000) (594,000) (240,000)
------------- ---------------- -------------- -------------
INCOME (LOSS) BEFORE PROVISION
(BENEFIT) FOR INCOME TAXES 2,072,000 3,175,000 (742,000) (396,000)
PROVISION (BENEFIT) FOR INCOME
TAXES 788,000 1,228,000 (281,000) (151,000)
------------- ---------------- -------------- -------------
NET INCOME (LOSS) $ 1,284,000 $ 1,947,000 $ (461,000) $ (245,000)
============= ================ ============== =============
NET INCOME (LOSS) PER SHARE
BASIC $ 0.14 $ 0.24 $ (0.05) $ (0.03)
============= ================ ============== =============
DILUTED $ 0.13 $ 0.24 $ (0.05) $ (0.03)
============= ================ ============== =============
WEIGHTED AVERAGE SHARES OUTSTANDING:
BASIC 9,189,000 8,264,000 8,568,000 8,328,000
============= ================ ============== =============
DILUTED 9,633,000 8,265,000 8,568,000 8,328,000
============= ================ ============== =============