stlplaceWe all know it’s a fad. But here is the one million dollar question: when shall we take profit (or loss) for the Heelys stocks (HLYS)? From the IBD article today, it seems Heelys still got room to grow. The following is quoted from IBD:
“For one thing, there’s still plenty of room to grow sales in parts of the country between the coasts, he says. And overseas sales offer lots of potential, especially in Europe.
I mean not just my Heelys shoes, but also the HLYS stocks I bought at the its IPO. I borrowed this title from Rick Munarriz at fool.com, here is his article. In summary, here are what he said:
1) Heelys is going to have a blow out fourth quarter.
2) They may guide a little higher for Q1 2007, and beat it eventually. From my observation some Sports Authority stores are low on inventory. Note Q1 is usually the slowest season for Heelys.
3) Expand into other products, helmet, T-shirts, caps, etc.
Well, Heelys (HLYS) the stock did not do much lately. But I am still doing my reality check, in the stores and on eBay. This week I am adding Crocs (CROX) because I bought some shares last December and plan to hold it for a while.
It appears my local Sports Authority(s) have sold most of Heelys, two (out of three stores) don’t have many in the shelf. On the other hand, those two stores moved Heelys back to the original “skate department”, vs. the main aisle. The other store still put it in main aisle (side by side with a knockoff product). The eBay sales are OK. Another interesting point is a “Heelys” search on flickr yields 102 results; it seems people are opening Xmas gifts now 🙂
Crocs are red hot this holiday season, despite it’s winter. I guess part of the reason is we got a relatively mild winter; and more importantly the company made a few smart decisions, such as co-branding with colleges, and opening the Kiosk in the malls (without any discount), etc. I think this is a safe bet compared to Heelys. Here are the numbers on eBay. This is mostly for fun, don’t take this too seriously.
Heelys Crocs
01Jan07 1059 2121
02Jan07 1050 1856
03Jan07 1092 1803
04Jan07 971 1423
05Jan07 964 1415
06Jan07 961 1398
(Update 09Jan): saw this post on Yahoo Message Board, it talked about the sales in Asia. Very postive.
It seems Heelys had a very good Christmas season. From my store visit to Journeys and Sports Authority, each account for 11.6% and 11% domestic sales in the fist 9 months in year 2006, the sales are doing well. I did notice one week before Xmas, SA offered some discount, and Journeys started discount after Xmas, both of which are normal business practice to clear out some inventories. The eBay sales number is here:
Heelys Faked
20Dec06 877 68
21Dec06 796 52
26Dec06 529 21
27Dec06 602 22
28Dec06 815 27
29Dec06 719 27
I went to the SA store at Brentwood, and I saw they emptied half of the shelf which was originally for Heelys (they put on some Under Armour socks instead). Is that a sign they are sold out? I don’t know. But one thing I do know SA usually have all the available shoes on the shelf, in other words, a customer can try the shoes without asking help from the associates. This is opposite to specialty stores such as Journeys: in Journeys a customer would tell the size he/she wants, and the associates will go back to the warehouse and bring up the shoes. I guess that’s one reason Journeys’ shoes are fully priced.
There are some negative comments on Heelys, both the shoes and the stock. Barron had this article on the weekend paper. It mentioned two things: Heelys is not only faddish but aimed at a notoriously fickle customer (kids); there is also product-liability risk (kids got hurt when skating on Heelys). While these are both legitimate concerns, here is a parent’s comment I saw from fatwallet “Kids crack their heads riding bikes, skateboards, and scooters. Kids crack their heads on the playground. Heelys get your kids to turn off the TV and be active and there are health benefits to that.”
While the stock could take a hit from the Barron article, I believe ultimately it’s the sales and profit number that will matter. Interestingly, when I was about to leave the SA store, I saw a guy bought not one, but two Heelys shoes for his kids. Maybe they are really sold out?
I got my Heelys on Friday. Have not tried to “heel” yet because I don’t want to hurt myself before Christmas. But I did some store visits for Heelys and found the buzz is still there. I also did some check on eBay, which I think is a better indicator than the local store numbers. Here are my findings on eBay:
Date #heelys #faked
12Dec06 1628 178
13Dec06 1300 128
14Dec06 1294 119
15Dec06 1270 81
16Dec06 1250 100
I visited Sport Authority, Journeys (those two counts the 11% and 11.6% of Heelys domestic sales for the first 9 months of 2006), Nordstrom, Dick’s Sporting Good, FinishLine, and Kids Footlocker.
1) Jouneys: every mall in St. Louis has this store. It seems selling well. I saw two instances people are looking or buying the Heelys. On a separate note, I was really impressed by Journeys’ efficiency in such a small space, their sales revenue per square footage should be very good. In a way I think kids like to “learn the fashion” from each other, in other words, the kids are helping Jounneys marketing the shoes, for free. Also, I found the associates in Jounneys are interesting young people, by “interesting” I mean they ususally have tatoos, strange hair style (young guys), and wear jeans with holes.
2) Sport Authority: while Journeys is a specialty store (it does not do discount very often); SA is a super market for sports goods (it gives discount for more stuff). I found the SA in Manchester Rd. is taking $10 off for all the kids’ Heelys. I am not particularly concerned on one instance. But if they continue to mark down the price (and in other stores), I will be concerned.
3) Other stores: Nordstrom is still the premier store (full price); FinishLine is a sports shoes store and it seems is not selling too many Heelys.
4) Knockoffs: I saw the knockoffs kiosk in the South County Mall yesterday. They are exactly same as the ones I saw on eBay. It starts from $49.99 after “30% off”. Again I questions the Parents/Grandparents’ mentality on buying knockoffs: I think they are just dumb, will you give your kids faked cars to drive?!
I did a little “Heelys” search on couple web 2.0 sites. First the flickr, it has 70 pictures; interestly, I searched “Crocs shoes” and it has about 670 photos. I noticed Crocs are everywhere in the stores and malls these days.
(Update 09Feb07) Flickr has 119 pictures as of today.
MySpace, the popular teen blogging site, has a team heelys page. I think this is sponsored by the market dept of the company. The user can join the demo team if he/she is real good. The page has 873 “friends”. This is my first visit to MySpace by the way.
(Update Jan23, 2007) Team Heelys Friend has 1021 friends.
(Update Feb27, 2007) 1104 friends.
YouTube, which generated lots of noise couple months ago when being bought out by Google, has this cool video to demonstrate what you can do with Heelys.
I also saw some knockoff products on eBay. Here is one. Note it titled “heelys style”. It seems to me easier to copy Heelys than Crocs because Crocs uses a special material, while people can copy Heelys mechanism just by analyzing it.
More about knockoff, I read an interesting comment at Zappos, a parent said”my kid worn off the heelys very quickly when learning to heel, should have bought a knockoff one for practice before buying the real stuff”. The real one is at least $59.99. I had to admit I have not bought sports shoes at/above that price…
I loaded some Heelys HLYS stocks at its IPO yesterday: pulled the trigger a little early and I am under water for now. Since I can’t do anything about the day to day stock price, I decided to check out it in the real world…Please note this is by no means a substitute for the fundamental or financial analysis of the company, this is just my informal reality check of heelys in the market place.
I visited some retail stores which carries Heelys in the area. Here is what I found:
1) Sports Authority: I visited three stores, one in Brentwood, one in St. Charle Rock Road, and last one at Ballwin. They all put the Heelys in the main aisle; but they don’t have a nice display like Nordstrom’s. I saw some action about Heelys: one customer exchanged her son/daughter’s shoes at the Brentwood store. SA sells about 11% of heelys in US domestic market (from its S1).
2) Nordstrom: St. Louis only Nordstrom is at West County mall, it has a good display for the product, although not extensive. As I mentioned before I happened to see a customer buying a pair for her grandson. I noticed the Nordstrom did not offer as many styles as Sports Authority, and they don’t have any discount (SA gives 10$ off for a few products).
3) Dick’s Sporting Good: this is a big outdoor sports gear store. But it has a small display like Nordstrom. Not very impressive.
4) Finish Line and Journeys. The former is a sports shoes store, the latter kids/teenager shoes store. I am impressed by Finished Line’s display (see the photo below). But from S1 we know Journeys sell 11.6% which is even higher than SA. This is the first time I went to the Journeys, it seems a very popular place. I saw the Converse shoes, which sponsors Dwyane Wade. One of my coworker told me his son likes his Converse all-star shoes very much (it costs more than 100, although it’s not good for his foot), and eventually he hurt his foot by wearing them. I think that’s a typical phenomena in American teen’s spending: fashion is much more important than substance.
I still have not seen kids skating in the malls or streets, according to its road show presentation, I heard it just started getting into midwest market. From Heelys web site I saw they have a demo team and here are their calendar. It seems to me their focus is the two coasts (east and west), and southwest for now. Like many other things, the trend starts from California or NY 🙂
I also searched “heelys” at flickr and found there are 70 pictures. Some are pretty cool.
(Update 11Dec06) I went to Galleria on Sunday. Besides Journeys, I found Kids Footlocker also has Heelys. I went to Chesterfield Mall this evening, both Journeys and Finishline have Heelys, again Finishline puts the Heelys in a more obvious location.
Obviously there is already a lot of excitement on this one, partly because of the success of similar plays such as UARM and CROX; partly because of Jim Cramer’s pump last night Dec 6, Jim did make a mistake saying it’s going out today (Dec 7), which is not true. It is going to be priced today and started trading tomorrow Dec 8, see this article from MarketWatch for more details.
(Update) Actually the HYLS was priced above the 16 to 18 range and went to 21, according to Reuters. Considering the 2006 earning of 1.00 (it already made 0.70 in first 9 months in 2006), and a PE ratio of 30 (which is reasonable), the stock could start at 30. This means a 50% jump from the IPO price. While this is not a record (compared to more than 100% jump of NMX), it will still be very nice. We can already see the action from today’s CSWC (it owns 35% of Heelys) stock, it went up 15%.
Once again the bubble is building…stay tuned.
According to Wikipedia, here are some of the controversy of Heelys:
As of September 2005, some (US) schools can have Heelys. These shoes are usually allowed but the removable wheels cannot be in place. With the wheels removed, the shoes function just like any other pair of shoes.
Some businesses; especially malls, discount retailers, warehouse stores, and grocery stores; find the shoes to be a problem and a hazard. Some children with the shoes use them in the crowded stores, thus creating a hazard to shoppers, a potential risks for falling and injury, and a problem for insurance in the store, even if they aren’t at fault.
There are also alleged health issues. A few doctors – mostly back, leg, and foot specialists –are concerned about how long-term use of Heelys may affect the developing spine and muscles of children and teens. According to these doctors, the stance that children use to ride the wheels in the back of the shoes makes the spine flex against its natural curve in the lower back. It may also cause pain on the side of the ankle going forward.
In 2006, Heelys were the #1 on the list of “most dangerous toys of 2006”. This is mainly because so many injuries are due to Heelys. However, it has been observed that 97.29% of Heely-induced injuries are caused by people doing one of two things: either attempting a trick they are incapable of, or attempting greater tasks when they are learning to use them. Once you have learned how to use Heelys, and you don’t attempt out-of-reach stunts, you are actually quite safe.