As previously announced, Big Dog Holdings, Inc. 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. 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 0.6%. 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, a 4.1% decline for the Big Dogs chain and 12.8% increase for the TWC chain.
Consolidated earnings were 38 cents per share for the fourth quarter 2005, as compared to 43 cents per share earned for the same period in 2004. Consolidated earnings for the year ended December 31, 2005 were 49 cents per share, as compared to 40 cents 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. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended Year Ended
December 31, December 31,
-------------------------- --------------------------
2005 2004 2005 2004
------------ ------------ ------------ ------------
NET SALES $ 59,420,000 $ 55,739,000 $179,115,000 $161,358,000
COST 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, marketing
and distribution 22,975,000 21,585,000 80,624,000 73,956,000
General and
administrative 3,395,000 2,516,000 9,631,000 8,060,000
------------ ------------ ------------ ------------
Total operating
expenses 26,370,000 24,101,000 90,255,000 82,016,000
------------ ------------ ------------ ------------
INCOME FROM
OPERATIONS 6,241,000 6,839,000 8,549,000 6,609,000
OTHER INCOME - - - 82,000
INTEREST INCOME 2,000 1,000 44,000 26,000
INTEREST EXPENSE (358,000) (238,000) (976,000) (857,000)
------------ ------------ ------------ ------------
INCOME BEFORE
PROVISION
FOR INCOME TAXES 5,885,000 6,602,000 7,617,000 5,860,000
PROVISION FOR INCOME
TAXES 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 SHARE
BASIC $ 0.40 $ 0.45 $ 0.52 $ 0.42
============ ============ ============ ============
DILUTED $ 0.38 $ 0.43 $ 0.49 $ 0.40
============ ============ ============ ============
WEIGHTED AVERAGE
SHARES 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
============ ============ ============ ============
