Sales weaken for Heelys

Heelys remains confident of ?long term potential? despite significant slow down in second half of 2007.
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Heely’s has reported a net loss of $5.5 million for the fourth quarter compared to a net income of $11.5 million for the same period in 2006.

Net sales for the fourth quarter dropped significantly from $71.1 million in 2006 to just $15.5 million. This amount was further impacted by an increase of $3 million in the firm’s reserve for Marketing Discretionary Fund assistance and another increase of $2.7 million in its returns service.

It posted a gross profit of minus $1.7 million compared with $25.1 million a year ago.

Ralph Parks, interim CEO said: “Our fourth quarter results reflect the ongoing challenge to bring retail inventories more in-line with consumer demand. While our sales and earnings were negatively impacted by higher returns and increased markdown assistance, we are pleased that we ended the year with more appropriate inventory levels across the majority of our channels of distribution.”

For the full year, ending December 31, 2007, net sales were $183.5 million compared with $188.2 million in 2006. Gross profit was also down, from $65.6 million in 2006 to $58.1 million. The firm recorded a net income of $22.3 million, down almost 7 million.

Parks added: “We began 2007 with a lot of positive momentum in our business which translated into a very strong first half of the year. Despite the slowdown we experienced over the past six months we continue to be very confident about our long-term potential and we remain excited about the many opportunities we still believe exist for our Company.

“We are very focused on working more closely with our retailers to find the right balance of inventory for the marketplace while at the same time developing more innovative and exciting products, including both wheeled and non-wheeled footwear,” he continued.

“We are also committed to growing our presence overseas, particularly focus on Europe where the brand has resonated very well with our target consumer. Looking ahead, this entire organisation is committed to improving on our recent performance and returning greater value to our shareholders.”

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