Big Dog Holdings third quarter consolidated net sales were $56.6 million as compared with $54.1 million in the third quarter 2006. Consolidated net sales increased 4.5%, primarily due to the addition of 26 new The Walking Company stores, offset by the closure of 17 Big Dog stores. Comparative retail store sales increased 1.2% for the third quarter 2007, a 9.6% increase for TWC, offset by a 10.7% decline for Big Dog.
The company had a total of 303 stores opened (165 TWC stores and 138 Big Dog stores) at the end of September 30, 2007, as compared to 294 stores (139 TWC stores and 155 Big Dog stores) as of September 30, 2006. Consolidated gross profit increased to $30.2 million in the third quarter 2007 as compared with $29.0 million in the third quarter 2006. The overall increase in consolidated gross profit is the result of increased sales for TWC and some improvement in gross margins at TWC and Big Dog. TWC gross margin was 51.6% compared to 51.3% last year. Big Dog's gross margin increased to 56.8% from 56.4% last year.
Consolidated operating expenses in the third quarter 2007 were $29.3 million, or 51.7% of consolidated net sales, compared to $27.7 million or 51.1% in 2006. Consolidated operating income for the third quarter 2007 was $944,000, compared to $1.3 million for the third quarter 2006. The increase in operating expenses as a percentage of sales and the decrease in operating income, are largely attributable to the reduction in Big Dog's revenue and contribution. As a result, the consolidated fully diluted net loss/income per share decreased to a loss of one cent per share as compared with five cents net income per share last year.
Andrew Feshbach, Chief Executive Officer, stated, “In regard to business at TWC for the third quarter, we achieved strong comparative stores sales increases and opened six (net) new TWC stores. Our increase in comparative store sales reflects continue expansion of market share in our existing malls, a strong fall merchandise mix, and the opening of our kiosk program in many of our store locations. Our new store openings as a whole are performing well in relation to our internal sales projections and we are on schedule to open an additional 20 stores in the fourth quarter. Looking forward to the fourth quarter and important holiday selling season we are presently trending at a similar pace to the third quarter. We are optimistic about our holiday prospects not withstanding the general conservative outlook for most retailers this fourth quarter.
“Our Big Dog business continues to under-perform and we expect this to continue in the foreseeable future. Management is focused on reducing long-term commitments and inventories. Further, we plan to be more aggressive promotionally during the holiday selling season.”
