posted
HLYS Starts trading tomorrow 12-7-6 on NASDAQ
Heelys is IPO of the week Commentary: Footwear maker grabbing attention PrintE-mailDisable live quotesRSSDigg itDel.icio.usRelated **** Posts & ArticlesBy Renaissance Capital Last Update: 8:27 AM ET Dec 5, 2006
NEW YORK (MarketWatch) -- While there are several interesting deals on this week's calendar, we selected Heelys as our featured IPO of the week since it will likely gain the most attention from investors and the media. For those of you who have ever seen kids zooming around miraculously on their sneakers in the mall, chances are they are wearing a pair of "HEELYS". The wheeled-footwear maker (HLYS : HLYS plans to offer 6.25 million shares at a range of $16-$18, with Bear Stearns and Wachovia Securities acting as joint book-running managers for the offering, which is slated to price on Thursday. This young company designs and sells patented, innovative wheeled footwear for action sports enthusiasts under the "HEELYS" brand. Its dual-purpose shoes incorporate a removable wheel in the heel that allows the user to seamlessly transition from walking or running to skating by shifting weight to the heel. When not in use, the wheel can easily be removed to transform the shoe into street footwear. Heelys offers single-wheel and two-wheel shoes, as well as "grind-and-roll" shoes for sliding on hand railings and other surfaces. Prices range from $59.99 to $99.99. Heelys also sells related accessories, such as helmets and replacement wheels. Where it's rolling Heelys was founded by psychologist-turned-inventor Roger Adams in May 2000 to provide a new and fun alternative product to skateboarding, inline and roller skating enthusiasts ages 6 to 14. Heelys initially concentrated on foreign markets, but after four years of stagnant sales, which were attributable to the emergence of counterfeit and knockoff products primarily in Japan and South Korea, management began to shift its focus to the U.S. market, which turned out to be a smart move. Helped by the increasing popularity of action sports and enhanced marketing efforts, Heelys managed to gain strong product awareness, which has caused sales to jump more than 300% so far this year, and management plans to maintain its current sales momentum by expanding doors at existing retailers, attracting new retail customers, increasing TV advertising, enhancing its wheeled footwear products and expanding its apparel and accessories offerings. While Heelys has experienced tremendous sales growth so far this year, it sells only one product whose long-term success is questionable. Additionally, the company is exposed to claims for product liability given the nature of its footwear, and many schools and malls have already banned its use. Lastly, counterfeit and knock-off products have caused sales in Asia to fall by 55% in 2004 and Heelys lacks long-term contracts with its manufacturers, retail customers and distributors. The bottom line Despite our aforementioned concerns and the fact that existing shareholders plan to sell half of the IPO shares, we believe Heelys will have a strong market debut given its impressive recent track record and its potential to expand in the US and international markets. In addition, the company is being brought to market at a discount to its closest comparable and hyper-growth footwear designer Crocs (CROX : CROX which went public in February 2006 at $21 per share and has since generated a whopping 99% return for investors.
UBBFriend: Email this page to someone!
Printer-friendly view of this topic
![[Roll Eyes]](rolleyes.gif)
![[Eek!]](eek.gif)
![[Big Grin]](biggrin.gif)
