Turnover at Heelys suffered another drop for the first quarter ended March 31, falling by 29.8 percent to $9.2 million compared with the same period in 2008. However, the company boosted its gross profit margin by 9.3 percentage points to 29.8 percent. The final result was a loss of $1.3 million, slightly more than the loss of $1.0 million suffered in the first quarter 2008.
Sales fell by almost 55 percent in the U.S. and by 12 percent in the rest of world, where better gross margins were achieved because of the recent start-up of new company-owned sales operations. Domestic sales represented only 27.1 percent of total sales, down from 41.7 percent at the same time last year.
The company has gone a long way in clearing up inventories, especially in the U.S.. At the end of the quarter they were down slightly to $11.6 million, compared with $12.2 million for the quarter in 2008 and with $12.1 million at the end of the fourth quarter.
With $68 million in net cash still available, Heelys’ board of directors decided that it will continue as an independent company at the end of a review of alternative options, where it was advised by Houlihan Lokey, was finished, and it will. One of the options considered in the review was a possible sale of Heelys to another company such as Skechers.