BIG DOG HOLDINGS, INC. REPORTS 4TH QUARTER AND 2006 YEAR SALES AND EARNINGS AND RECENT EVENTS
SANTA BARBARA, CALIFORNIA—April 2, 2007—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, 2006.
As previously announced, consolidated net sales for the fourth quarter 2006 were $72.6 million, a 22.2% increase as compared to $59.4 million in the same quarter of 2005. Our consolidated net sales increased $13.2 million primarily due to the additional new stores opened during the period, the Steve’s Shoes, Inc. acquisition on January 31, 2006 and a comparative store sales increase of 5.8% (TWC had a comparative store sales increase of 14.5% while the Big Dogs chain had a comparative store sales decrease of 4.3%). The Company had a total of 306 stores opened (151 TWC stores and 155 Big Dogs stores) at the end of the period, as compared with 268 stores (92 TWC stores and 176 Big Dogs stores) on December 31, 2005. Consolidated net sales for the year ended December 31, 2006 were $218.6 million, a 22.1% increase, as compared to $179.1 million in 2005. Comparable retail store sales increased 3.0% for the year (10.6% increase for the TWC chain and 4.8% decline for the Big Dogs chain.)
Consolidated earnings were $.31 per share for the fourth quarter 2006, as compared to $.38 per share earned for the same period in 2005. Consolidated earnings for the year ended December 31, 2006 were $.10 per share, as compared to $.49 per share in 2005. Consolidated net income was $3.0 million and $1.0 million for the fourth quarter and year 2006, respectively, as compared to $3.6 million and $4.7 million for the same periods in 2005. For the quarter ended December 31, 2006, the Company’s gross margin for the fourth quarter was 52.9% in 2006 as compared to 54.9% for the same period in 2005. Gross margins for the year ended 2006 were 53.5% compared to 55.2% for 2005. Consolidated operating expenses were 45.3% and 51.8% of sales for the fourth quarter and year ended 2006, respectively, as compared to 44.4% and 50.4%, respectively, for 2005.
The Company’s 2006 financial results reflect a core growth in the TWC business with TWC’s sales increase of 56%. TWC’s gross margin was stable from 2005 however, the Company increased expenses relating to freight and distribution expenses which decreased TWC’s margin in the 4th quarter. The Company’s Steve’s Shoes’ acquisition stores achieved stability in the 4th quarter and posted flat comparative sales (although not reported in the Company’s comparative sales for stores opened for 12 months). Big Dogs results declined as a result of the closure of 24 Big Dogs stores, lower traffic in our malls and increased pricing pressure which resulted in lower gross margins.
The Company’s first quarter 2007 financial results are expected to show an approximate comparative stores sales growth of 12% for the TWC chain and 27% for Steve Shoe’s acquisition stores. (Note that the Steve’s Shoes acquisition stores will be included in TWC store comparative sales base as of February 1, 2007.) TWC’s gross margin appears to be slightly above from last year. The Big Dogs chain comparative store sales are approximately 5% down from last year, however gross margins are up compared to last year. Big Dogs store contribution level appears to be approximately the same as last year.
As previously announced, the Company relocated its Los Angeles distribution center and set up a new distribution center in North Carolina. Resulting from this move, the Company incurred one time operating expenses of approximately $1.4 million of which about half were incurred in the 4th quarter 2006 and the remaining were incurred in the 1st quarter 2007.
CEO Andrew Feshbach stated, “Overall, we are pleased with the progress we have made in 2006. Although our net income declined year over year, 2006 was a building year which required us to lay the foundation in our operating infrastructure to support our future TWC growth. We believe we were effective in growing the TWC business and have now stabilized the results of Big Dogs.”
Conference Call
The Company will host a conference call at 1:30pm PDT on Wednesday, April 4th to discuss financial results for the quarter and year ended December 31, 2006, recent corporate developments and the company’s outlook for 2007. Dial in information is as follows: U.S. Toll Free: 1-800-434-1335. Participant code (to be given to the operator): 51754981#. In the event you are unable to attend a recordable copy will be available two (2) hours after the call has ended. Dial in information to listen to the recorded call is as follows: 1-800-750-4065, Participant code: 524593#.
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® brand image is one of quality, value and fun. The BIG DOGS® 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 145 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 149 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.
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For Further Information:
Big Dog Holdings, Inc.
121 Gray Avenue
Santa Barbara, California 93101
www.bigdogs.com
www.thewalkingcompany.com
Contact:
Alexis Dilg
Investor Information
(805) 963-8727, ext. 1360
alexisd@bigdogs.com
