Big Dog Holdings Earnings Climb From Walking Company Contribution

Big Dog Holdings consolidated net sales for the third quarter were $44.9 million, compared with $42.7 million in 2004. Consolidated net sales increased 5.2%, primarily due to comparative stores sales increase of 4.1%. Comparative store sales declined 1.6% at Big Dog locations while comparative store sales increased 13.1% for The Walking Company.

The Company had a total of 263 stores opened (176 Big Dog stores and 87 TWC stores) at the end of the period, as compared 261 stores last year (188 Big Dogs stores and 73 TWC stores as of September 30, 2004). Consolidated gross profit increased to $25,286,000 in the third quarter 2005 as compared with $23,433,000 in the third quarter 2004. The overall increase in consolidated gross profit is the result of increased sales for TWC, as well as increased margin contributions from both Big Dogs and TWC. Big Dogs' gross margin for the period increased to 60.4%, as compared to last year's margin of 58.0%, and the gross margin for the TWC chain increased to 50.9% compared to 49.7% last year.

Consolidated operating expenses in the third quarter 2005 were $22,262,000, or 49.6% of consolidated net sales, compared to $21,174,000, or 49.6% in 2004. Consolidated net income increased to $1,770,000 in 2005 as compared to $1,284,000 for the third quarter 2004. Fully diluted net income per share increased to 18 cents per share as compared with 13 cents per share last year.

Included in the third quarter, effective August 31, 2005, is the purchase by The Walking Company of Footworks, a seven-store comfort shoe chain that primarily operates in the Las Vegas market. The Company purchased its assets for approximately $10.1 million.

Andrew Feshbach, Chief Executive Officer, stated, “Given the unusual number of hurricanes this quarter, we are very pleased with the results of our 3rd quarter business for both chains. Currently, we are focused on our 4th quarter business and integrating our Footworks acquisition into The Walking Company. Sales in the 4th quarter are trending as experienced earlier this year and we look forward to a good holiday selling season.”

                  BIG DOG HOLDINGS, INC. AND SUBSIDIARIES
                   CONSOLIDATED STATEMENTS OF OPERATIONS
                               (Unaudited)


                            Three Months Ended        Nine Months Ended
                               September 30,             September 30,
                            2005         2004         2005         2004
                        ------------ ------------ ------------ ------------

NET SALES              $ 44,909,000 $ 42,695,000 $119,695,000 $105,619,000
COST OF GOODS SOLD       19,623,000   19,262,000   53,502,000   47,934,000
                       ------------ ------------ ------------ ------------
GROSS PROFIT             25,286,000   23,433,000   66,193,000   57,685,000
                       ------------ ------------ ------------ ------------
OPERATING EXPENSES:
 Selling, marketing
  and distribution       20,055,000   19,363,000   57,649,000   52,371,000
 General and
  administrative          2,207,000    1,811,000    6,236,000    5,544,000
                       ------------ ------------ ------------ ------------
     Total operating
      expenses           22,262,000   21,174,000   63,885,000   57,915,000
                       ------------ ------------ ------------ ------------
INCOME (LOSS) FROM
 OPERATIONS               3,024,000    2,259,000    2,308,000     (230,000)
OTHER INCOME                      -            -            -       82,000
INTEREST INCOME               1,000        5,000       42,000       25,000
INTEREST EXPENSE           (170,000)    (192,000)    (618,000)    (619,000)
                       ------------ ------------ ------------ ------------
INCOME (LOSS) BEFORE
 PROVISION (BENEFIT)
 FOR INCOME TAXES         2,855,000    2,072,000    1,732,000     (742,000)
PROVISION (BENEFIT) FOR
 INCOME TAXES             1,085,000      788,000      658,000     (281,000)
                       ------------ ------------ ------------ ------------
NET INCOME (LOSS)      $  1,770,000 $  1,284,000 $  1,074,000 $   (461,000)
                       ============ ============ ============ ============

NET INCOME (LOSS) PER
 SHARE
   BASIC               $       0.19 $       0.14 $       0.12 $      (0.05)
                       ============ ============ ============ ============
   DILUTED             $       0.18 $       0.13 $       0.11 $      (0.05)
                       ============ ============ ============ ============

WEIGHTED AVERAGE
 SHARES OUTSTANDING:

   BASIC                  9,141,000    9,189,000    9,169,000    8,568,000
                       ============ ============ ============ ============
   DILUTED                9,680,000    9,633,000    9,736,000    8,568,000
                       ============ ============ ============ ============