The Walking Company Holdings, Inc. reported fourth quarter net sales increased 3.9% to $ 79.6 million from $76.6 million last year as full year sales grew 3.5% to $241.5 million from $233.3 million in 2007. Sales growth was primarily due to the addition of 23 net new TWC stores and a comparable store sales increase of 6.7% in Q4 and 1.8% for the year. Gross margin declined about 200 basis points in Q4, primarily due to TWC discontinuing its Big Dog outlet business and liquidating that inventory.
CEO Andrew Feshback said strong sales of UGG boots, increases in overall womens products and strength in the companys Internet initiatives more than offset weakness in the mens business. Regarding outlook, Feshback estimated comps would be down mid- to high-single-digits, with margins remaining flat compared to last year.
Plans for the struggling Big Dog chain remain on hold since WALK failed to sell the chain in fall 2007 and declined a liquidators bid following that. Management believes the brands Internet business still carries value, but has been weighed down by weakness in the outlet chain. Big Dogs outlets have been reduced from 131 stores at year-end 2007 to 14 today.
Among a large-scale effort to restructure finances, The Walking Company has laid off over 500 employees, mainly from Big Dog. Furthermore, every employee at WALK has taken a reduction in compensation, with the largest cuts taken from the salaries of the executive team. Layoff and wage cuts are expected to reduce overhead costs by 20%.
WALK has also reached an agreement with its lender to increase its available lines of credit and has notified its landlords that it requires a reduction in rent for the remainder of the year, and has reached an agreement with bond holders to allow pay-in-kind interest for up to two years while the holders have reduced indebtedness owed by roughly $3 million. Lastly, The Walking Co. will de-list from NASDAQ.