Heelys Inc., which is in the process of being bought out by a private equity firm, saw its losses in the third quarter swell to $2.4 million, or 9 cents a share, from $1.5 million, or 5 cents, a year ago.
A pretax, goodwill impairment charge of $1.5 million was taken during the period. The charge covered the reassessment of its Germany and France business given the sale. Excluding the charge as well as restructuring charge of $14,000, the operating loss in the latest quarter was $1.4 million, a reduction from $1.9 million a year ago. Revenues were flat in the quarter at $6.6 million.
As reported, Heelys on Oct. 22 said it agreed to sell itself for $13.9 million in cash to Evergreen Group Ventures. The agreement contains a 30-day “go-shop period” during with other proposals will be evaluated. Heelys' cash and marketable securities, which totaled approximately $58.2 million as of June 30, will not be included in the acquired assets in the transaction, and will be liquidated upon completion of the sale.
In the quarter, domestic sales advanced 17.3 percent to $2.7 million as a result of sales of its Sidewalk Sports wheeled footwear that began selling in the fourth quarter of 2011. International sales were down 8.5 percent to $3.9 million reflecting lower Heelys-wheeled footwear sales in France, Germany and Italy.
Gross margins decreased to 32.3 percent from 36.8 percent, primarily the result of $238,000 in inventory markdowns related to its Nano inline footboard and another $67,000 of markdowns of non-current Heelys-wheeled footwear in the U.S. and Europe. The margin was also impacted by a larger percentage of sales of lower-priced shoes sold at smaller-product margins, including sales of $482,000 in Sidewalk Sports products.
