Heelys reported that net sales for the third quarter ended Sept. 30 dropped by 23.3 percent to $8.2 million. International turnover fell by 15.9 percent to $6.9 million, while revenues from the home U.S. market plunged by 48.0 percent to $1.3 million.
The company blamed drops in France in Germany for the decrease abroad, and said that retailers were uncertain of consumers’ demand for spring and summer. Heelys sells direct to retailers in those two countries. The drop at home was attributed to a combination of lower sales to discount channels, and a perceived caution among retail customers when it came to inventory.
The gross profit margin climbed by 5.6 percentage points to 39.7 percent. This was made up of a 2.1 percentage point decline internationally to 40.0 percent, due to a drop in the average sales price per pair caused by changes in product mix sold directly to retailers versus pairs sold to third-party distributors. The gross profit margin in the U.S. jumped 38.0 percent in the third quarter of 2010, compared with a margin of 7.8 percent last year. This came on a higher average price per pair sold as a result of a decrease in sales to discount retailers and a decrease in material costs.
The American company reported a net loss of $69,000, versus a net loss of $1.1 million in the third quarter of 2009.
