Despite a 29.0 percent plunge in revenues to $8.8 million for the second quarter ended June 30, Heelys managed to report net income of $473,000, compared with a loss of $1.6 million in the same period in 2009. The gross profit margin jumped by 9.3 percentage points to 42.2 percent.
The company had a $3.4 million charge last year to settle a shareholder lawsuit, and a $721,000 gain this year on a settlement over a patent and trademark infringement case. Excluding litigation costs and benefits, Heelys cut its losses in the period.
The drop in sales year-over-year did mark an increase from the previous quarter, when sales were $6.7 million. However, sequentially the gross profit margin dropped from a previous level of 47.9 percent.
Heelys still has $69.1 million in cash and investments on its balance sheet. The company also noted new additions to the management team: Rick Groesch is now vice president ? brand, Craig Storey is chief operating officer and chief financial officer, and Rene Trevino is the new head of sales.
The company said that the retail environment continues to be difficult as retailers are wary of taking on much inventory, fearful of another drop into recession. It expects that its new Nano and HX2 products will revitalize interest in the brand. It noted that its performance outside its home market of the U.S. was still consistent.