SANTA BARBARA, CA, August 3, 2004 - Big Dog Holdings, Inc. (NASDAQ: BDOG; www.bigdogs.com; www.thewalkingcompany.com), a developer and retailer of branded, lifestyle consumer products, today reported the financial results for the second quarter ended June 30, 2004. The results for the second quarter include assets and operations of The Walking Company ("TWC") which was acquired on March 3, 2004. TWC is the leading specialty retailer of high-quality, technically designed comfort walkwear and accessories.

For the quarter ended June 30, 2004, consolidated net sales were $41,043,000 as compared with $24,208,000 in the second quarter 2003. Our consolidated retail sales increased 70%, primarily due to the addition of approximately $18 million of revenue from our new TWC operations. The Company had a total of 263 stores opened (190 Big Dog stores and 73 Walking Company stores) at the end of the period as compared with 200 Big Dogs stores on June 30, 2003. Comparative store sales declined 1.2% for the Big Dogs chain and increased 5.3% for the TWC chain. Consolidated gross profit increased to $23,030,000 in the second quarter 2004 as compared with $14,218,000 in the second quarter 2003. The overall increase in consolidated gross profit is the result of contributions from TWC. Big Dogs' margin contribution for the period increased to 60.5% as compared to last year's margin contribution of 58.7% and the gross margin for the TWC chain was 50.5%.

Consolidated operating expenses in the second quarter 2004 were $20,811,000 or 50.7% of sales compared to $13,216,000 or 54.6% in 2003. The dollar increase in consolidated operating expenses primarily relates to the TWC acquisition, while the decrease in such expenses as a percentage of sales is attributable to leveraging these expenses over a larger revenue base, in addition to efficiencies created as a result of the TWC acquisition. The consolidated fully diluted net income per share for the second quarter increased to $.14 per share, as compared with a consolidated fully diluted net income per share of $.07 for the second quarter 2003.

Andrew Feshbach, Chief Executive Officer, stated, "We are very pleased with the results of our 2nd quarter, our first complete quarter owning The Walking Company. Financial results were strong. Just in the first four months of the acquisition, we have achieved many of our financial and organizational goals that we set for ourselves at the outset of the transaction. Although we did experience a slow down in revenue at the Big Dogs chain, overall profitability increased due to improved gross margins and cost controls. The sales momentum for the TWC chain is strong and improving so far in the 3rd quarter."

As of June 30, 2004, approximately $5 million of obligations incurred in connection with the TWC acquisition have been extinguished primarily through conversion of debt into 993,000 common shares of the Company. The conversion price was $4.35 per share. Big Dogs purchased the 10% minority interest in TWC effectively completing the acquisition of 100% of the Company.

Commenting on the financial condition for Big Dogs, Mr. Feshbach stated, "Our balance sheet, already strong, has been improved through the conversion of notes issued during the acquisition into common shares. This also has put about 1 million more shares into the public hands, our first step in improving the trading volume and liquidity in our stock."

Other Business:

Big Dogs closed its wholesale division including the newly acquired Lifeforms business. All future sales to other retailers, domestic or foreign, will be managed by our corporate sales or licensing divisions. All expenses associated with the closure have already been absorbed. Roberta Morris, Chief Financial Officer, stated, "Closing the wholesale division will simplify our distribution center and help us focus on growing our newly acquired TWC operations. The wholesale division accounted for approximately 2% of sales for Big Dogs in 2003."

Big Dog Holdings, Inc. consists of Big Dogs and The Walking Company. Big Dogs develops, markets and retails a branded, lifestyle collection of unique, high-quality, popular-priced consumer products, including activewear, casual sportswear, accessories and gifts. The BIG DOGS® brand image is one of quality, value and fun. The BIG DOGS® brand is designed to appeal to people of all ages and demographics, particularly baby boomers and their kids, big and tall customers, and pet owners. In addition to its 188 retail stores, Big Dogs markets its products through its catalog, internet and corporate sales accounts. The Walking Company is a leading independent specialty retailer of high quality, technically designed comfort shoes and accessories that features premium brands such as ECCO, Mephisto, Dansko, Birkenstock and Merrell among many others. These products have particular appeal to one of the largest and most rapidly growing demographics in the nation. The Walking Company operates 74 stores in premium malls across the nation.

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995

With the exception of historical information, the matters discussed in this press release are forward looking statements that involve a number of risks and uncertainties. The actual future results of the Company could differ significantly from those statements. Further information on the Company's risk factors is contained in the Company's quarterly and annual reports as filed with the Securities and Exchange Commission.


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Big Dog Holdings, Inc.
121 Gray Avenue
Santa Barbara, California 93101


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Laura Russell
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(805) 963-8727, ext. 1360