USA Today: Heelys shoes roll in new direction, without wheels

May 21, 2008 at 3:17 am

By Bruce Horovitz, USA TODAY

May 21, 2008

The wheels are coming off of Heelys (HLYS).

The once-highflying, trendy company best known for the kid-targeted, wheel-in-the-sole shoes banned from many schoolyards and shopping malls, will on Wednesday unveil an unlikely new product for 2008 back-to-school: Heelys without wheels.

With wheeled-shoe sales sliding in the USA, the firm — whose revenue declined 73% in the first quarter of 2008 from a year earlier — will in July launch a line of grippy rubber shoes targeted at preteen skateboarders.

The move follows two quarters of “inventory management issues,” says Don Carroll, who was named CEO on Tuesday. Translation: too many Heelys, too few customers.

“Our biggest competition has been for share of wallet, given the economy,” he says. Now, Heelys will evolve into a “health and fitness” products company, he says.

That may be a tough sell. “Heelys without wheels in an economy without juice just won’t roll,” warns Marian Salzman, a teen-trend spotter. “Unless, that is, they get banned from school,” which adds cachet.

The new shoes do come adorned with skulls, crossbones and graffiti, even on girl-targeted shoes. But Heelys has seen its best days, says Matt Powell, analyst at SportsOneSource, a research firm. “The highflying days of a hot brand are not going to return.”

But Carroll, former marketing chief at RadioShack who joined Heelys five months ago, says he’s got big brand-revival plans. Within five years, its wheeled shoes that generate 100% of sales will account for just 30% to 35%, he projects

“We don’t see ourselves as just a shoe company,” he says. Future products (which he won’t name) will target kids who skateboard, bicycle, scooter and wave-board.

The upcoming line of Sidewalk Sports shoes, dubbed Gecko and Gila, cost $39.99 a pair. That’s about $20 less than most wheeled Heelys, up to $40 less than many.

The new shoe line features a rubber sole that the company claims has 33% more grip than any other skate shoe. That can help skateboarders stay on their boards better when they’re doing tricks.

But it’s a big stretch to link Heelys with skate shoe brands, such as Vans, says youth market consultant Gary Rudman. “Kids are loyal to their skate shoe brands. This is a brand that has nothing to do with skating or extreme sports.”

Give it time, says Carroll. The product extension is a natural, he insists. Later this fall, Heelys also will roll out glow-in-the-dark wheeled Heelys, he says.

Vans is unconcerned. “We’ve seen a lot of companies come and go in skateboarding over the last 40 years,” says Chris Overholser, marketing chief. He says that Heelys will simply be one more that comes — and goes.

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Entry filed under: Press.

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