Big Dog Holdings, Inc. second quarter net sales increased 5.0% to $55.9 million, compared with $53.2 million in 2006. Sales at The Walking Company increased 15% to $38.4 million due to the opening of new locations and a high-single-digit comp-store sales increase. The Big Dog chain saw sales decline 12% to $17.5 million. Comp sales  increased 2.3% for the quarter, with a 6.4% increase at TWC offset by a 5.3% decline at the Big Dogs chain.

Management feels that TWC is outperforming the overall footwear market, which they believe to be rather soft currently. They also feel that TWC will continue its comp-sales increases through the third quarter.  Management did not provide much detail on Big Dog, except to say “it’s been going as it’s been going.”

Total consolidated gross profit slipped 70 basis points to 54.6% of sales in the second quarter compared with 55.3% in 2006.  TWC's gross margin remained flat at 52.4% while Big Dogs' gross margin decreased 60 basis points to 59.5%.  SG&A expenses as a percentage of sales increased 70 basis points to 53.1% due to the lower sales at the Big Dog chain and store refurbishment expenses.

Operating income for the second quarter 2007 was $828,000, compared to $1.5 million for the second quarter 2006. Management said that they are seeing improvement in comparable operating profit at TWC at the store level due to the consolidation and leveraging of distribution expenses, but it needs to progress faster.

The company’s bottom line slipped into the red for the quarter, with a net loss of $188,000 compared to a net profit of $641,000 in the year-ago quarter. The net loss per share for the quarter decreased to 2 cents net loss per share, as compared with 6 cents EPS for 2006.