Big Dog Holdings, Inc. to Acquire The Walking Company.

Business Editors

SANTA BARBARA, Calif.--(BUSINESS WIRE)--Jan. 27, 2004

Big Dog Holdings, Inc. (Nasdaq:BDOG) is pleased to announce that it has agreed to acquire The Walking Company for cash, debt and equity securities in excess of $15 million. The Walking Company is the leading specialty retailer of high-quality, technically designed comfort walkwear & accessories that features quality brands such as Ecco, Mephisto, Dansko, Birkenstock and Merrell. The Company markets the collections of products through more than 70 retail store locations with total annual sales of $65 million.

The Walking Company was founded in 1991 and grew rapidly from a base of 20 stores in 1995 to over 100 stores in 2003. As a result of their rapid expansion, The Walking Company made certain real estate and merchandising missteps and eventually declared bankruptcy last summer. The bankruptcy process allowed The Walking Company to shed their non-performing stores and liquidate excess and obsolete inventory. The current enterprise is now wholly re-focused on its core business of operating specialty stores in premium malls selling the best brands in the comfort shoe category.

"Big Dogs has been looking for the right acquisition opportunity for years," comments Big Dogs CEO Andrew Feshbach. "We are excited about The Walking Company's retail concept and niche and its future growth prospects. Further, we believe we can achieve substantial operating leverage and cost savings by more fully utilizing Big Dog's' systems and distribution infrastructure and experienced management team. In addition, we believe there are excellent future growth opportunities for The Walking Company once we have fully absorbed their operations."

David Wolf, Sr. Vice President of Sales and Marketing, comments, "We are very impressed with the growth opportunity in the premium comfort walkwear market. Key brands are growing rapidly, fueled by the growing demographics of the comfort walkwear customer and the acceptance, awareness and interest in this type of product. Further, we believe there are substantial opportunities to improve the brand image and perception of The Walking Company retail stores."

Big Dog Holdings, Inc. develops, markets and retails a branded, lifestyle collection of unique, high-quality, popularly priced consumer products, including active wear, casual sportswear, accessories and gifts. The BIG DOGS brand image is one of quality, fun and a sense of humor. 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 194 retail stores, Big Dogs markets its products through its catalog, better wholesale 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 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.