Heelys…The Wheels Are Falling Off (HLYS)

August 7, 2007 by Douglas A. McIntyre

After Heelys, Inc. (NASDAQ:HLYS) had already been cut almost in half, the roller shoe maker is feeling even more pain.  The company posted $0.45 EPS on revenues of $74.3 million.  This was more than a 100% EPS gain and over 130% in revenue gains year over year, and estimates from First Call were $0.42 EPS & $73.3 million in revenues.  But then came the guidance….

Heelys now only sees $0.28 to $0.30 EPS on revenues of $55 to $58 million.  First Call estimates are $0.38 and $68+ million.  It also expects an implied $207 to $216 million in revenues, but analysts are looking for more than $272 million in revenues.  That isn’t just a miss, that is a total wiff. 

It sounds sort of like all Heelys has to look forward to tomorrow at this point is all of that 4+ million shares in the short interest that hadn’t covered their positions that might want to declare victory.  It’s being hit hard enough you’d think they hired Barry Bonds as the role model.  Shares had traded up almost 10% a day after hitting new lows, but shares are reeling in after-hours trading with shares down 30% to new post-IPO lows down under $16.00.

Jon C. Ogg
August 7, 2007

Jon Ogg can be reached at jonogg@247wallst.com; he does not own securities in the companies he covers.