Big Dog Holdings, Inc. reported net sales for the quarter ended March 31, 2003 were $15,354,000 as compared with $17,546,000 in the first quarter 2002. Our total retail store sales decreased 12% due to the closing of 9 stores and our comparable store sales decrease of 12.4% for the quarter. The Company had 200 stores opened at the end of the period as compared with 206 stores on March 31, 2002.

Gross profit for the quarter decreased to $8,103,000 as compared with $9,266,000 in the first quarter 2002 due to the decrease in sales. The gross margin remained stable at 52.8%. Operating expenses in the first quarter 2002 were 81.5% of sales or $12,512,000 as compared to 74.4% or $13,060,000 in 2002. The loss from operations increased to $4,409,000 as compared to $3,794,000 in the first quarter 2002. The net loss for the first quarter increased to $2,750,000 or $.33 per share, as compared with $2,383,000 or $.28 per share for the first quarter 2002.

Commenting on the first quarter results, Andrew Feshbach, Chief Executive Officer, stated, “Our first quarter sales continued in the same trend as last quarter holiday season. This year’s Easter holiday shifted into the second quarter this year, which resulted in lower traffic levels and sales in March. We continue to focus on taking steps to strengthen our balance sheet and position us for our summer selling season.”

The Company was informed by NASDAQ that the Company’s shares of common stock could be listed on the NASDAQ Small Cap Market or over the counter on the OTCBB, rather than on the National Market, unless they traded above a certain price for a designated period. The Company’s shares have now met that requirement and will therefore remain listed on the NASDAQ National Market.


                                                Three Months Ended
                                                     March 31,
                                                2003         2002

NET SALES                                    $15,354,000  $17,546,000
COST OF GOODS SOLD                             7,251,000    8,280,000
GROSS PROFIT                                   8,103,000    9,266,000
  Selling, marketing and distribution         11,311,000   11,836,000
  General and administrative                   1,201,000    1,224,000
    Total operating expenses                  12,512,000   13,060,000
LOSS FROM OPERATIONS                          (4,409,000)  (3,794,000)
INTEREST EXPENSE, NET                             62,000       81,000
LOSS BEFORE BENEFIT FROM INCOME TAXES         (4,471,000)  (3,875,000)
BENEFIT FROM INCOME TAXES                     (1,721,000)  (1,492,000)
NET LOSS                                     $(2,750,000) $(2,383,000)