Big Dog Holdings, Inc., parent company to the Walking Company retail chain, reported that consolidated net sales for the third quarter jumped 44.8% to $42,695,000 compared with $29,487,000 in the third quarter 2003, primarily due to the addition of approximately $16 million of revenue from the addition of TWC March 2004.
The company had a total of 261 stores opened (188 Big Dog stores and 73 Walking Company stores) at the end of the period, as compared with 198 Big Dogs stores on September 30, 2003.
Comparative store sales declined 0.7% for the quarter (7.1% decline for the Big Dogs chain and 12.2% increase for the TWC chain.)
Consolidated gross profit increased to $23,433,000 in the third quarter 2004 as compared with $16,829,000 in the third quarter 2003. The increase in consolidated gross profit is the result of contributions from TWC. Big Dogs' gross margin for the period increased to 58.0%, as compared to last year's margin of 57.1%, and the gross margin for the TWC chain was 49.7%.
Consolidated operating expenses in the third quarter 2004 were $21,174,000, or 49.6% of consolidated net sales, compared to $13,579,000 or 46.1% in 2003. Operating expenses grew as a percentage of sales primarily as a result of the negative operating leverage associated with seasonally low sales at TWC and the decrease in revenue at Big Dogs.
The consolidated net income decreased to $1,284,000 in 2004 as compared to $1,947,000 for the third quarter 2003. Fully diluted net income per share decreased to $.13 per share as compared with $.24 per share last year due to the decrease in consolidated net income and approximately 20% increase in the number of fully diluted shares outstanding this quarter.
Andrew Feshbach, Chief Executive Officer, stated, “We are very pleased with the advances we have made to date regarding the turnaround and integration of The Walking Company. The third quarter saw a substantial amount of progress in bringing those efforts to a conclusion. Our earnings declined primarily as a result of a drop in sales in August at the Big Dog chain and as a result of the negative operating leverage. Traffic in our malls declined sharply, possibly as a result of high gas prices, reduced tourism, severe weather in the Southeast or other variables. Sales have gotten off to an excellent start in the 4th quarter and we look forward to a good holiday selling season.”
