Heelys, Inc.'s sales slid 23.3% in the third quarter, to $8.2 million. Losses were cut to $69,000, or less than 1 cent a share, from $1.1 million, or 4 cents, a year ago. Sales slid 15.6% to $6.9 million internationally due to lower sales to the German and French markets.


International gross margin eroded to 40.0% of sales from 42.1% of sales as a result of changes in mix of product sold directly to retailers versus pairs sold to third-party distributors.

Domestically, sales plunged 48.0% to $1.3 million due to a combination of lower sales to discount channels and what HLYS said was retailers’ caution in taking inventory risk. Domestic gross margins improved to 39.7% of sales from 34.1% of sales due to a higher average price per pair sold as a result of a decrease in sales to discount retailers and a decrease in material costs.

SG&A expenses, excluding litigation settlements and related costs, were reduced to $3.5 million from $4.1 million a year ago.
Company CEO Tom Hansen said that the company has seen renewed interest among retailers that have not carried Heelys recently as well as positive sell throughs with key retailers in small door programs.