Big Dog Holdings Inc. Reports Record Sales for FourthQuarter and 1999.

Business Editors & Retail Writers

SANTA BARBARA, Calif.--(BUSINESS WIRE)--Jan. 14, 2000

Big Dog Holdings Inc. (Nasdaq:BDOG) today reported sales results for its fourth quarter and year ended Dec. 31, 1999.

Financial Results

Net sales for the fourth quarter

were $39.1 million, a 9.5% increase as compared with $35.7 million in 1998. Comparable retail store sales increased 4.1% for the period. Net sales for the year ended Dec. 31, 1999, were $109.6 million, an 8.8% increase as compared with $100.7 million in 1998. Comparable retail store sales increased 1.0% for the year. Both the quarterly and annual sales figures are records for the company.

Operating expenses as a percentage of sales appear to be in line with the company's expectations. While final audited net income for 1999 will not be available until March 23, 1999, the company believes that it will be in line with expectations. The company ended the year with approximately $18 million in cash and investments, as compared with $13 million at the end of 1998.

Other Business

Andrew Feshbach, chief executive officer, stated: "We are pleased with our fourth-quarter business. Our net income will be up substantially over 1998, and our balance sheet is very strong and improved over last year with increased cash and lower inventories. Gross margins were tempered somewhat by increased promotional activity and continued increased sales in products other than T-shirts, which have a somewhat lower margin.

"We continue to make progress on a number of corporate opportunities including our work with Deutsche Banc Alex. Brown, PETsMART.com, Paula Hart and on the Internet. We are poised for an excellent year in 2000."

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.

Focusing on quality, value and fun, the BIG DOGS(R) 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, when they are engaged in leisure or recreational activities.

In addition to its 190 retail stores, Big Dogs markets its products through other channels, including its catalog, better wholesale accounts and Internet sales.

Statements contained in this news release that are not historical information are forward-looking statements as defined within the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those projected or implied. In addition, prior financial performance is not necessarily indicative of the results that may be expected in the future, and the company believes that such comparison cannot be relied upon as indicators of future performance.

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: With the exception of historical information, the matters discussed in this news 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. Factors that could cause or contribute to such differences include, but are not limited to, whether any transaction will result from the engagement of a financial adviser, the ability to successfully develop the television show and the PETsMART.com relationship, the future results of the company's Web site, future sales of fall merchandise and the ability to continue to realize operating efficiencies and positive earnings trends. 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.