Given the diagonal geometries in panels 2 and 3, my impression is that Ernie presents us with a ghost-panel, where Nancy’s dog has already seen the scene outside the window.
Nancy’s dog then resorts to barking at the picture of Sluggo’s head on the wall to spare Nancy the agony of seeing Sluggo’s activity on the street.
All this is very confusing for Nancy shown in panel 3; but not as confusing (and agonizing) as seeing Sluggo on the street with another girlfriend.
Do you mean the clothes tree Nancy fetched from the Dump?
Or. do you mean the tree in Sluggo’s yard, and the three tree branches intruding through a hole in a wall of Sluggo’s home that he uses as a ”clothes tree” ?
I always enjoy Ernie’s strips that show how bureaucracy and bureaucracies alienate and fail children.