Heelys has a lot riding on first nonshoe product

2015/1/26 5:46:37    Edit: Veilisr    View:

Faced with waning sales of its wheeled shoes, Heelys Inc. is introducing its first nonshoe product in an effort to appeal to tweens and teens looking for the latest extreme sport.

The Carrollton company today rolls out the Nano, a fast, skateboard-like contraption worn on one foot with a Heelys shoe �C minus the wheel. The other foot wears a traditional Heelys wheeled shoe.

Starting next month, a red-and-black Nano will sell for $79.95. For the holidays, Heelys plans to offer a blue model with lighted wheels for $99.95.

The patent-pending Nano is part of Heelys\' strategy to boost waning sales and widen its core market of 8- to 12-year-olds. Last month, it began selling two-wheeled shoes called HX2 aimed at younger children.

This could be a pivotal moment for Heelys, which has grappled with lawsuits, product problems and a string of chief executive departures since 2007.

When Heelys appeared in 2000, the company was heralded for finding the zeitgeist of American youth. Sales skyrocketed, and Heelys went public in late 2006. By the following August, Wall Street had cut Heelys\' stock price virtually in half in one day because of safety concerns and flagging sales.

Last year, Heelys was unprofitable, and revenue fell 38 percent to $43.8 million. Sales peaked at $188.2 million in 2006. The company plans to release second-quarter financial results next month.

Heelys shares ended Wednesday at $2.65, down from a peak of $40.09 in early 2007.

One hit?

Questions have circulated for years as to whether Heelys is a one-hit wonder. Company officials hope the Nano puts such doubts to rest.

Heelys has high hopes the Nano will expand its product offering, tweak its brand, attract an older audience (ages 9 to 18) and lay the groundwork for other products.

\"This is the first product under a new philosophy �C around Heelys as a system, not just a shoe,\" said chief executive Tom Hansen. \"The cool thing about this is there\'s nothing else like this out there.\"

Heelys investor Chris Mooney of Dallas hopes the Nano does the trick.

\"It looks like it would be of interest to the skateboarder, free-runner community. But I\'m not their customer,\" said Mooney, who works as a stock broker. \"It\'s an interesting departure but still fits with their marketing channels. If successful, it would extend them more into sporting goods retailers.\"

How it works

The Nano is an arrowhead-shaped molded plastic board with two graphite wheels. It weighs nearly 3 pounds and is 15 inches long and 4 inches high.

Here\'s how it works: Pop the wheel out of any Heelys shoe. Snap the shoe onto the Nano. The other foot wears a wheeled Heelys shoe.

Ryan Wills, Heelys\' director of innovation who invented the Nano, describes using it as a hybrid of in-line skating and skateboarding. He says the Nano is more versatile for doing tricks, and it\'s small enough to fit in a backpack or school locker.

The Nano is much faster than Heelys shoes, but you don\'t get as tired, said Joe Edison, manager of Heelys skate team, which has been testing the Nano for several months.

Having your foot attached to the board \"would seem like a bigger liability,\" said Dave Manivanh, co-owner of the 6-year-old Rec Shop, a skateboard shop in Dallas. \"If [the Nano] is heavy, it will twist some ankles. I wouldn\'t buy it.\"

A few years ago, Heelys faced increased consumer safety scrutiny that caused buyers to be reticent and many schools, malls and other places to ban the use of Heelys.

In 2005, the U.S. Consumer Product Safety Commission said 1,600 Heelys-wearing kids were injured each year. In 2006, World Against Toys Causing Harm, a Boston-based watchdog group run by trial lawyers, listed Heelys among the 10 most dangerous toys.

Heelys management at the time said injuries were not due to a product defect.

Hansen said the Nano isn\'t dangerous. However, he and other Heelys officials don\'t recommend it for young children.

\"It\'s no different than a skateboard and in fact it\'s probably easier to stop and turn,\" Hansen said. \"There\'s no problem with danger. We\'ve done the initial review with our insurance company.\"

The cool factor

There\'s room for a new skateboard-like product, but the \"cool\" factor must be high, said Thomas B. Doyle, a vice president of the National Sporting Goods Association. Three-quarters of skateboarders are 17 and younger.

\"Kids under driving age are looking for some form of personal transportation,\" Doyle said. \"Skateboard sales plummeted when in-line skates and scooters came out.\"

Skateboard sales were down 13 percent last year from their peak in 2003.

Heelys officials wouldn\'t disclose the cost of developing the Nano, which was done in-house in the last year. Testers, such as Edison, gave Heelys valuable feedback about the type of strap (it adds stability for doing tricks) and about adding a grind plate.

Graphic panels similar to shoe inserts can be used to personalize the top of the Nano. Each Nano will come with one insert, but Heelys plans to offer customized inserts and sign licensing agreements with movies and bands, Hansen said. It also plans to sell accessories, a variety of wheels and customized bases, such as a wood or snakeskin pattern, he said.

Heelys plans to reach its audience using social media marketing. Starting this month, it will post videos on social network sites like Facebook of testers using the Nano in Dallas, New York and other cities, Hansen said.

The company also has made other changes to support its new strategy.

Hansen, a former advertising executive, restructured his management team: Craig Storey, former CEO of preschool toy maker Sprig Toys Inc., joined last month as chief financial officer and chief operating officer, and Rick Groesch, with a background in sports marketing and licensing, became vice president of brand engagement in February.

Look for future products to be more along the lines of sports equipment and built around the Heelys\' snap-in system, Hansen said.


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