SOURCE: The Walking Company Holdings, Inc.

August 12, 2008 08:00 ET

The Walking Company Holdings, Inc. Announces Second Quarter 2008 Financial Results

SANTA BARBARA, CA--(Marketwire - August 12, 2008) - The Walking Company Holdings, Inc. (NASDAQ: WALK) (www.thewalkingcompany.com) (www.bigdogs.com), a developer and retailer of branded, lifestyle consumer products, today reported the financial results for the second quarter ended June 30, 2008.

For the quarter ended June 30, 2008, consolidated net sales were $56,020,000, as compared with $55,854,000 in the second quarter 2007. Our consolidated sales increased 0.3%. The Company had a total of 295 stores opened (201 TWC stores and 94 Big Dogs stores) at the end of the period, as compared with 302 stores opened on June 30, 2007 (160 TWC stores and 142 Big Dogs stores). Comparative retail store sales decreased 1.2% for the second quarter 2008 (3.2% decline for the TWC chain and 4.0% increase for the Big Dogs chain.) Total consolidated gross profit was 51.0% of sales or $28,578,000 in the second quarter 2008, as compared with 54.6% of net sales or $30,498,000 in the second quarter 2007. TWC's margin contribution decreased to 51.7% as compared to last year's margin contribution of 52.4%. TWC product margin remained constant to last year however the overall margin decreased as a result of liquidating certain inventory items. Big Dogs' margin contribution for the period decreased to 49.1% as compared to last year's margin contribution of 59.5%. Big Dogs' margin decline is the result of increased promotional activity resulting in higher sales.

Consolidated operating expenses in the second quarter 2008 were $30,856,000 or 55.1% of sales, compared to $29,670,000 or 53.1% in the second quarter 2007. Consolidated operating loss for the second quarter 2008 was $2,278,000, compared to operating income of $828,000 for the second quarter 2007. The decrease in operating income is largely attributable to the closures of Big Dogs stores, a $2,900,000 reduction in TWC sales ($1,000,000 million attributable to a decline in TWC comparative store sales revenue, and $1,900,000 from our store retrofitting program), and operating lag resulting from our newly opened TWC store openings. As a result, the consolidated fully diluted net loss per share for the second quarter 2008 increased to $0.23 net loss per share, as compared with $0.02 net loss per share for the second quarter 2007.

The Walking Company Holdings, Inc. (the "Company") consists of its The Walking Company and Big Dogs subsidiaries. The Walking Company ("TWC") is a leading independent specialty retailer of high-quality, technically designed comfort footwear and accessories that features premium brands such as ECCO, Mephisto, Dansko, Uggs, and MBT, 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 201 stores in premium malls across the nation. Big Dogs develops, markets and retails a branded, lifestyle collection of unique, high-quality, popular-priced consumer products, including active wear, 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 94 retail stores, Big Dogs markets its products through its catalog, corporate sales accounts and Internet sales.

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 sales and other results of the Company could differ significantly from those statements. Further information on the Company's risk factors is contained in the Company's March 31, 2008 quarterly and December 31, 2007 annual reports as filed with the Securities and Exchange Commission.

                     THE WALKING COMPANY HOLDINGS, INC.
                        CONSOLIDATED BALANCE SHEETS
                               (Unaudited)

                                                         June 30,
                                                ---------------------------
                                                    2008          2007
                                                ------------- -------------

                                 ASSETS
CURRENT ASSETS:
   Cash and cash equivalents                    $     946,000 $     937,000
   Receivables, net                                 5,100,000     3,360,000
   Inventories, net                                67,975,000    69,403,000
   Prepaid expenses and other current assets        1,575,000     1,841,000
   Deferred income taxes                            2,189,000     7,326,000
                                                ------------- -------------
      Total current assets                         77,785,000    82,867,000
PROPERTY AND EQUIPMENT, Net                        38,030,000    29,028,000
INTANGIBLE ASSETS, Net                              3,471,000     3,907,000
GOODWILL                                            6,296,000     3,131,000
DEFERRED INCOME TAXES                               6,486,000     1,875,000
OTHER ASSETS                                          412,000       365,000
                                                ------------- -------------
   TOTAL                                        $ 132,480,000 $ 121,173,000
                                                ============= =============

                   LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
   Short-term borrowings                        $  38,396,000 $  24,394,000
   Current portion of long-term debt                3,385,000     3,332,000
   Accounts payable                                13,585,000    13,711,000
   Accrued expenses and other current
    liabilities                                     7,020,000     6,036,000
                                                ------------- -------------
      Total current liabilities                    62,386,000    47,473,000
LONG-TERM CONVERTIBLE DEBT                         17,481,000    17,250,000
NOTES PAYABLE                                       2,480,000     3,447,000
CAPITAL LEASE OBLIGATIONS                           1,453,000     2,136,000
DEFERRED RENT AND LEASE INCENTIVES                  9,101,000     5,671,000
DEFERRED GAIN ON SALE-LEASEBACK                        63,000       116,000
                                                ------------- -------------
   Total liabilities                               92,964,000    76,093,000
STOCKHOLDERS' EQUITY                               39,516,000    45,080,000
                                                ------------- -------------
   TOTAL                                        $ 132,480,000 $ 121,173,000
                                                ============= =============






           THE WALKING COMPANY HOLDINGS, INC. AND SUBSIDIARIES
                  CONSOLIDATED STATEMENTS OF OPERATIONS
                                (Unaudited)


                         Three Months Ended          Six Months Ended
                               June 30,                  June 30,
                      ------------------------  --------------------------
                          2008         2007         2008          2007
                      -----------  -----------  ------------  ------------

NET SALES             $56,020,000  $55,854,000  $102,398,000  $100,078,000
COST OF GOODS SOLD     27,442,000   25,356,000    50,484,000    46,281,000
                      -----------  -----------  ------------  ------------
GROSS PROFIT           28,578,000   30,498,000    51,914,000    53,797,000
                      -----------  -----------  ------------  ------------
OPERATING EXPENSES:
   Selling, marketing
    and distribution   26,370,000   25,578,000    52,236,000    50,916,000
   General and
    administrative      1,975,000    2,419,000     4,004,000     4,474,000
   Depreciation and
    amortization        2,511,000    1,673,000     4,579,000     3,488,000
                      -----------  -----------  ------------  ------------
      Total operating
       expenses        30,856,000   29,670,000    60,819,000    58,878,000
                      -----------  -----------  ------------  ------------
LOSS FROM OPERATIONS   (2,278,000)     828,000    (8,905,000)   (5,081,000)
INTEREST INCOME                 -        3,000         2,000         6,000
INTEREST EXPENSE       (1,075,000)  (1,132,000)   (2,106,000)   (1,838,000)
                      -----------  -----------  ------------  ------------
LOSS BEFORE BENEFIT
 FROM INCOME TAXES     (3,353,000)    (301,000)  (11,009,000)   (6,913,000)
BENEFIT FROM INCOME
 TAXES                 (1,175,000)    (113,000)   (3,855,000)   (2,590,000)
                      -----------  -----------  ------------  ------------
NET LOSS              $(2,178,000) $  (188,000) $ (7,154,000) $ (4,323,000)
                      ===========  ===========  ============  ============
NET LOSS PER SHARE
   BASIC              $     (0.23) $     (0.02) $      (0.75) $      (0.46)
                      ===========  ===========  ============  ============
   DILUTED            $     (0.23) $     (0.02) $      (0.75) $      (0.46)
                      ===========  ===========  ============  ============

WEIGHTED AVERAGE SHARES
 OUTSTANDING:

   BASIC                9,518,000    9,415,000     9,499,000     9,375,000
                      ===========  ===========  ============  ============
   DILUTED              9,518,000    9,415,000     9,499,000     9,375,000
                      ===========  ===========  ============  ============

Contact Information