Big Dog Holdings, Inc. second quarter net sales increased 5.0% to $55.9 million, as compared with $53.2 million in the second quarter 2006. The company opened primarily due to the addition of 27 new The Walking Company stores during the quarter to bring total store count to 302 stores (160 TWC stores and 142 Big Dog stores) at the end of the period, as compared with 294 stores opened on June 30, 2006 (133 TWC stores and 151 Big Dogs stores).
Consolidated operating expenses in the second quarter 2007 were $29.7 million or 53.1% of sales, compared to $27.8 million or 52.4% in the second quarter 2006. Consolidated operating income for the second quarter 2007 was $828,000, compared to $1.5 million for the second quarter 2006. The increase in such expenses as a percentage of sales and the decrease in operating income, are largely attributable to the reduction in Big Dogs revenue as well as some operating lag resulting from our newly opened TWC outlet store openings. As a result, net income became a loss of $188,000 after a net profit of $641,000 in the year-ago quarter. The consolidated fully diluted net income/loss per share for the second quarter 2007 decreased to 2 cents net loss per share, as compared with 6 cents net income per share for the second quarter 2006.
Andrew Feshbach, CEO, stated, “Aside from the first two weeks in April where retail sales were soft in general and across the country, we continued our trend of strong single digit comps for the remainder of the quarter. However, our earnings per share for the quarter reflect, among other things, the continued decrease of our Big Dogs' business. Our Big Dogs outlet business continues to experience negative sales trends and we are maintaining a sharp focus on reducing commitments. We opened 13 TWC stores year-to-date and are scheduled to open approximately 30 additional stores in 2007. Our core TWC stores remain strong and our Steve's Shoes acquisition stores operating performance has improved and is on plan.”
“Looking forward we continue to see the same sales and operating trends for TWC and potentially may experience further erosion of our Big Dogs business, for the third quarter as experienced in the second quarter. We believe that our TWC business remains strong and we have new and exciting Fall merchandise initiatives to introduce. Our corporate infrastructure has been built including our newly opened distribution center from which we have experienced operating leverage this last quarter and we expect to see continue for the remainder of the year. Our balance sheet was strengthened with our earlier $18.5 million convertible debt financing and is positioned to support our TWC growth plan. Lastly, we are excited about the September 1st launch of our new website which we believe will be the world's largest internet comfort store.”
BIG DOG HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
---------------------------- ----------------------------
2007 2006 2007 2006
------------- ------------- ------------- -------------
NET SALES $ 55,854,000 $ 53,178,000 $ 100,078,000 $ 91,848,000
COST OF GOODS
SOLD 25,356,000 23,795,000 46,281,000 42,369,000
------------- ------------- ------------- -------------
GROSS PROFIT 30,498,000 29,383,000 53,797,000 49,479,000
------------- ------------- ------------- -------------
OPERATING
EXPENSES:
Selling,
marketing and
distribution 25,578,000 24,210,000 50,916,000 45,750,000
General and
administrative 2,419,000 2,102,000 4,474,000 4,122,000
Depreciation
and
amortization 1,673,000 1,531,000 3,488,000 2,857,000
------------- ------------- ------------- -------------
Total
operating
expenses 29,670,000 27,843,000 58,878,000 52,729,000
------------- ------------- ------------- -------------
INCOME (LOSS)
FROM
OPERATIONS 828,000 1,540,000 (5,081,000) (3,250,000)
INTEREST INCOME 3,000 2,000 6,000 4,000
INTEREST
EXPENSE (1,132,000) (516,000) (1,838,000) (785,000)
------------- ------------- ------------- -------------
INCOME (LOSS)
BEFORE
PROVISION
FOR (BENEFIT
FROM) INCOME
TAXES (301,000) 1,026,000 (6,913,000) (4,031,000)
PROVISION FOR
(BENEFIT FROM)
INCOME TAXES (113,000) 385,000 (2,590,000) (1,512,000)
------------- ------------- ------------- -------------
NET INCOME
(LOSS) $ (188,000) $ 641,000 $ (4,323,000) $ (2,519,000)
============= ============= ============= =============
NET INCOME
(LOSS) PER
SHARE
BASIC $ (0.02) $ 0.07 $ (0.46) $ (0.28)
============= ============= ============= =============
DILUTED $ (0.02) $ 0.06 $ (0.46) $ (0.28)
============= ============= ============= =============
WEIGHTED
AVERAGE SHARES
OUTSTANDING:
BASIC 9,415,000 9,177,000 9,375,000 9,135,000
============= ============= ============= =============
DILUTED 9,415,000 10,308,000 9,375,000 9,135,000
