Heelys, Inc. (NASDAQ: HLYS) today reported the following financial
results for the first quarter ended March 31, 2008.
Net sales for the first quarter of 2008 were $13.1 million compared to
net sales of $49.4 million in the corresponding period a year ago. Gross
profit was $2.8 million, or 21.5% of net sales, compared to $17.5
million, or 35.4% of net sales for the first quarter of 2007. Total
selling, general and administrative expenses were $6.1 million, or 46.4%
of net sales, compared to $5.2 million, or 10.6% of net sales in the
first quarter of last year. The Company reported a net loss for the
quarter of $1.0 million, or ($0.04) per diluted share compared to net
income of $8.5 million, or $0.30 per diluted share in the first quarter
of 2007. Excluding the costs associated with the transition of our CEO,
the Company reported a net loss of ($0.02) per diluted share in the
first quarter of 2008.
Ralph Parks, Interim Chief Executive Officer of Heelys, Inc. (the “Company”)
commented, “During the first quarter we
continued to deal with many of the same issues that negatively impacted
our business during the second half of 2007. That said, over the past
few months we have witnessed improving trends in several key areas,
including lower inventory levels in the channel, a modest increase in
average selling prices, and a reduction in markdown assistance. In
addition, recent feedback from many of our retail partners regarding
consumer demand for our wheeled footwear has been encouraging. We are
working hard to rebuild momentum in the marketplace through enhanced
marketing and advertising programs that highlight the fun and excitement
of our products and connect with our target demographic.”
The Company also announced that it has entered into a termination
agreement with Trotwood Import/Export and will take over direct
distribution of Heelys in France and Monaco. Heeling Sports EMEA, Heelys’
European subsidiary will open a sales office based in Annecy, France in
May.
Mr. Parks concluded, “Despite the difficult
start to 2008 we believe we are moving in the right direction.
Domestically, we remain focused on better aligning inventory with demand
while overseas we have recently expanded our presence in Europe and
begun implementing a direct sales model in select markets. We are
confident that our strong brand equity combined with our unique and
patent-protected product offering provides us growth opportunities well
into the future.”
Conference Call Information
A conference call to discuss first quarter fiscal 2008 financial results
is scheduled for today (May 8, 2008) at 4:30 PM Eastern Time. A webcast
of the call will take place simultaneously and can be accessed by
clicking http://investors.heelys.com/index.cfm
or www.opencompany.info. To
listen to the broadcast, your computer must have Windows Media Player
installed. If you do not have Windows Media Player, go to the latter
site prior to the call, where you can download the software for free.
About Heelys, Inc.
Heelys, Inc. designs, markets and distributes innovative, action
sports-inspired products under the HEELYS®
brand targeted to the youth market. The Company’s
primary product, HEELYS-wheeled footwear, is patented dual purpose
footwear that incorporates a stealth, removable wheel in the heel.
HEELYS-wheeled footwear allows the user to seamlessly transition from
walking or running to skating by shifting weight to the heel. Users can
transform HEELYS-wheeled footwear into street footwear by removing the
wheel. HEELYS-wheeled footwear provides users with a unique combination
of fun and style that differentiates it from other footwear and wheeled
sports products.
Forward Looking Statements
Certain statements in this press release and oral statements made from
time to time by representatives of the Company are “forward-looking
statements” for purposes of the safe harbor
provisions of The Private Securities Litigation Reform Act of 1995,
including in particular, statements regarding our guidance, outlook for
future events, financial performance, customer demand, growth and
profitability. In some cases, you can identify forward-looking
statements by terminology such as “subject to,”
“believes,” “anticipates,”
“plans,” “expects,”
“intends,” “estimates,”
“may,” “will,”
“should,” “can,”
the negatives thereof, variations thereon, similar expressions, or
discussions of strategy. All forward-looking statements are based upon
management’s current expectations and various
assumptions, but they are inherently uncertain, and the Company may not
realize its expectations and the underlying assumptions may not prove
correct. The Company’s actual results and the
timing of events could differ materially from those described in or
implied by the forward-looking statements as a result of risks and
uncertainties, including, without limitation, the fact that
substantially all of the Company’s net sales
are generated by one product, the Company may not be able to
successfully introduce new product categories, the Company’s
intellectual property may not restrict competing products that infringe
on its patents from being sold, the Company’s
dependence on independent manufacturers, continued changes in fashion
trends and consumer preferences and general economic conditions, the
outcome of lawsuits filed against the Company, which could have a
material adverse effect on us, and additional factors which are detailed
in the Company’s filings with the Securities
and Exchange Commission, including the Risk Factors contained in the
Company’s Annual Report on Form 10-K.
Investors, potential investors and other readers are urged to consider
these factors carefully in evaluating the forward-looking statements and
are cautioned not to place undue reliance on such forward-looking
statements. The forward-looking statements made herein are only made as
of the date of this press release and the Company undertakes no
obligation to publicly update such forward-looking statements to reflect
subsequent events or circumstances.
