Heelys Is So Over

Shares of Heelys Inc plunged 40% when the NASDAQ opened this morning. Yesterday the company warned that its third quarter and full year results would be weaker than what analysts were expecting.
It's kind of an awkward moment for analysts, many of whom had rated the company very highly. Less than one month ago, for instance, Robert W. Baird analyst Mitch Kummetz initiated coverage of the company with an "outperform" rating. Today he used his keen insight hindsight into the company to downgrade his rating to a "neutral." At least four other analysts have followed suit, employing the amazing analyst power of hindcasting to downgrade the company after the public disclosure.
What's gone wrong at Heelys? According to JPMorgan analyst Robert Samuels the immediate problem is that Heelys sold too many shoes to retailers for the back-to-school season. As it turns out, kids aren't wearing the wheeled shoes back to school, though, so retailers are stuck with extra inventory and "will not have to order more until next year." Of course, that's assuming that anyone will be buying Heelys next year. And it's safe to say that's a somewhat dubious assumption.
"Samuels said footwear trends have been soft this summer, but Heelys faces bigger problems. He said Heelys management is not sure what the company's future holds," the Associated Press reports.
Fortunately, DealBreaker readers are probably making a bundle from shorting Heelys, since we told you that the stock price was laughable back in December.
Ahead of the Bell: Heelys Plummets [Associated Press via Houston Chronicle]