DALLAS (AP) ¿ Heelys Inc., which makes sneakers with built-in wheels for kids, said Thursday its first-quarter loss widened amid a difficult retail environment.

For the three months ended March 31, the company lost $1.3 million, or 5 cents per share, compared with a loss of $1 million, or 4 cents per share, a year earlier.

The Dallas-based company said net sales dropped 29 percent to $9.2 million, from $13.1 million a year ago.

But Mike Hessong, interim chief executive officer, noted in a press release that the company is encouraged by the positive reaction to its new styles.

While Heelys isn't assuming an improvement in the retail environment, Hessong said the company is in a better position heading into the summer and back-to-school season.

After a review of strategic alternatives, Heelys also announced that its board of directors decided it's currently in the best interest of the company and its stockholders to continue operating Heelys as an independent company.

Heelys had previously said it was reviewing options including the sale of the company.

Gross profit was $2.9 million, or 30.8 percent of net sales in the first quarter. That compared with a gross profit of $2.8 million, or 22 percent of net sales last year.

Total selling, general and administrative expenses were $5.3 million during the period, down from $6.1 million in the first quarter of last year.

As of March 31, 2009, the company had cash and cash equivalents of $66.1 million compared with $100.8 million last year.

Shares of Heelys rose 7 cents to $1.87 during the regular session.
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