Big Dog Holdings, Inc. reported that consolidated net sales for the first quarter ended March 31 were $31.3 million, a 43% increase compared with $21.9 million in the first quarter 2004. Consolidated net sales increased primarily due to the addition of $10.6 million of revenue from The Walking Company business which was acquired on March 3, 2004.

The Company had a total of 254 stores opened (180 Big Dog stores and 74 TWC stores) at the end of the period, as compared with 263 stores opened on March 31, 2004 (191 Big Dog stores and 72 TWC stores.)

Comparable retail store sales increased 4.4% for the quarter (5.6% decline for the Big Dogs chain and 14.8% increase for TWC chain.)

Total consolidated gross profit for the quarter increased to 51.8% of net sales or $16.2 million as compared with 51.3% of net sales or $11.2 million in the first quarter 2004. The overall dollar increase in consolidated gross profit is primarily the result of contributions from our new TWC chain as well as higher percentage margin contribution from both the Big Dogs and TWC chains.

Andrew Feshbach, Chief Executive Officer, stated, “Our TWC business experienced solid operating results in the first quarter, as reflected in strong positive comparative store sales increase and merchandise margin growth. The increase in The Walking Company comparable store sales is primarily related to improved inventory levels and merchandise selection at the TWC stores since the Company purchased The Walking Company out of bankruptcy in March 2004. At Big Dogs, we continue to move toward a business model which emphasizes our graphic strength and less reliance on promotional pricing. Similar sales trends for both TWC and Big Dogs have continued into the second quarter.”

Consolidated operating expenses in the first quarter 2005 were $20.0 million or 63.8% of sales compared to $15.9 million or 72.8% in 2004. The dollar increase in consolidated operating expenses primarily relates to the TWC acquisition, while the decrease in such expenses as a percentage of sales is attributable to leveraging these expenses over a larger revenue base in addition to efficiencies created as a result of the TWC acquisition.

The consolidated net loss per share for the first quarter 2005 decreased to 26 cents per share, as compared with a consolidated net loss of 36 cents per share for the first quarter 2004 primarily due to a lower net loss for the quarter, and additional shares outstanding as of quarter end.

                         BIG DOG HOLDINGS, INC. AND SUBSIDIARIES

                                                           Three Months Ended
                                                                March 31,
                                                       2005                   2004
                                                -------------------     ------------------

NET SALES                                        $   31,345,000          $   21,880,000
COST OF GOODS SOLD                                   15,118,000              10,659,000
                                                -------------------     ------------------
GROSS PROFIT                                         16,227,000              11,221,000
                                                -------------------     ------------------
      Selling, marketing and distribution            18,267,000              14,131,000
      General and administrative                      1,743,000               1,797,000
                                                -------------------     ------------------
            Total operating expenses                 20,010,000              15,928,000
                                                -------------------     ------------------
LOSS FROM OPERATIONS                                 (3,783,000)             (4,707,000)
INTEREST INCOME                                          40,000                   7,000
INTEREST EXPENSE                                       (151,000)               (132,000)
                                                -------------------     ------------------
         INCOME TAXES                                (3,894,000)             (4,832,000)
BENEFIT FROM INCOME TAXES                            (1,480,000)             (1,836,000)
                                                -------------------     ------------------
NET LOSS                                         $   (2,414,000)         $   (2,996,000)
                                                ===================     ==================
         BASIC                                  $         (0.26)         $        (0.36)
                                                ===================     ==================
         DILUTED                                 $        (0.26)         $        (0.36)