I told you all guys, that I’ll post the call that I had with Staffaroni today morning. Here it is ….
We had a couple of misses before we could catch each other. I appreciate Staffaroni that he took time to call me thrice. We missed each other twice.
Staffaroni: Hi Adarsh, Mike Staffaroni from (NASDAQ:HLYS) Heelys.
Adarsh: Hey Mike, we have been playing hide and seek for some time now. I appreciate you taking some time off your schedule to gimme a call. Thanks, first of all.
Staffaroni: That’s my pleasure. Always open to investors.
Adarsh: Mike, I don’t want to eat up a lot of your time. So, let me directly jump into the matter. Can you please touch base with me about how the national marketing is going on?
Staffaroni: The US marketing of Heelys has been doing great. We started the television advertisements last year. And we are going to have Back to School advertisements from the first week of September. Things are working out wonderful as planned in the United States.
Adarsh: Mike, then how is the international marketing growing?
Staffaroni: We have been very healthily growing both into UK and other European countries. Europe has welcomed Heelys with open arms. You must have noticed our recent hire Neil into the company and it has been working very well. Our International Marketing is growing much higher than expected.
Adarsh: Have the concerns on Marketing Strategies gone down?
Staffaroni: We have been following ‘Distribution Channels Strategy’ since long. We have subsidiaries that We have these distributors who sell to the retailers. This strategy has been working out quite well for us.
Adarsh: Mike, I see a lot of countries that you have ventured into. But I see only one location in China and not even one location in India. Don’t you think, these two countries, with huge populations, would provide you with much higher returns? Don’t you think they are cash makers?
Staffaroni: Though, the population is higher, we as a company look at the average household income there. The average house hold income there is much less and that actually limits the margins we can have for the inventory sold. Moreover, the problems with the falsification of the product has been on the rise. Though, I should make a special mention that we have had modest success in eliminating the piracy. But, let me tell you that this is not a problem just with Heelys, most major brands are facing it now and are striving hard to fight against piracy.
Adarsh: Any venturing into the apparel market? If you are, what type, Sports wear, seasonal or Normal wear.
Staffaroni: We have started T-shirts, bags and other apparel wear as a test phase last year. This is still in the test phase. Recently we introduced some more apparel model, but let me mention it again, we are still in the testing phase, and it won’t account to a lot of revenues to Heelys. Our major revenues comes from our wheeled footwear. Let me also mention that we are having a TRADE SHOW next week in Las Vegas. We are introducing our first non-wheeled footwear there. And we opine we will get a very good response from the consumer. We are planning every thing long term at least 3-5 years.
Adarsh: Mike, I’m know it is difficult, but do you have any comments on the recent stock volatility? What is Venture Capital planning to do with the stock sale they just canceled?
Staffaroni (laughs for atleast 5 seconds) : Adarsh, it is hard to predict the market and how or why it reacts in a certain way. Venture Capital, has been with us for a long time. They financially benefited from the growth of our company. They had these 9 million shares at certain price, the stock price ran higher and created an imbalance in their portfolio. I think they wanted to lock in the profits and have the same amount of stock financially in their portfolio than numerically. It is common that a money manager would like to take profits if he makes money some where. But the market looks it some other way. I personally do not have any comments on it. Nothing fundamentally has changed.
Adarsh: What do you comment on Heelys growth?
Staffaroni: We do not want a spiky growth in the company, we want the company to grow modestly, and have a sustained growth long term. We don’t want to outperform the market one quarter and then under perform the other. We want to be performers.
Adarsh: Have you zeroed into when you are going to release the earnings this quarter?
Staffaroni: We have not yet decided on the date and time. We will be doing that in the next couple of days.
Adarsh: Mike, I see that the company has a lot of cash at hand. I also see that the stock price has fallen from the high 30’s to the low 20’s, a fall of around 40% in a quarter. Do you think it is a right time to buy back some of the stock?
Staffaroni: Adarsh, we follow the distribution marketing strategy and we think we need some money at disposal for a growing company. We have now put our apparel into test in the market, and we think we’ll hold on to our cash. We are not planning on any buy back as of now. But you never know. May be we will announce in some time. (laughs)
Adarsh: (laughs) So you want to keep that speculation on?
Adarsh: ok Mike one last question. Is Heelys up for sale?
Staffaroni: (laughs really hard ) Heelys are selling in a lot of retailers if you want a pair. (laughs) But if you talk about the company, we are not going to sell ourselves. But, you never know, if we get that opportunity, and it is good for our product line, may be we’ll be up for sale!!!
Adarsh: Mike, wow that was a great session with you. I really appreciate you taking off some time from your busy schedule and calling me.
Staffaroni: That was actually a good time off with your call. We are always open to your queries.
Note: Guys this is the interview. I did not record the call. So, I am not very sure, whether I could bring back the same comments. I can say that the meaning has not been changed. I expressed the comments in my words.
FYI: I am not a licenced broker or a stock adviser. Invest or make your decisions on your own. I just make my recommendations to point people to stocks that have good prospects.
Hope that helps,
Your Adarsh
paid off well. But, we are holding onto play this quarter’s earnings, when other analysts would upgrade it to take it high, higher and higher. And then we get out sneakily. hehehe Forgot to mention did you collect the dividend (penny and a dime) ;)
This is a growth play…not a spec.
