Wheeled footwear company Heelys has widened its first quarter loss as better margins failed to offset sloping sales.

For the quarter ended 31 March, net loss was US$1.3m, versus $1.0m in the same period last year.

Net sales fell to $9.2m from $13.1m a year ago.

Total selling, general and administrative expenses were $5.3m compared to $6.1m in the first quarter of last year.

Mike Hessong, interim chief executive officer of Heelys, said: "In the current difficult environment, we continue to focus on managing inventory, reducing expenses, and preserving our strong cash and balance sheet position.

"While we expected continued pressure on our top line, we were able to increase our gross margin and reduce certain operating expenses.

"During the quarter, we also developed a new web site, sold our one millionth pair of Heelys in Japan and launched a new grass roots driven marketing campaign.

"While we are not assuming an improvement in the overall retail environment during the near-term, we are encouraged by the early reaction to our new styles and we believe that we are in a better position from both a product and inventory standpoint as we head towards the summer and back-to-school selling seasons."

The company said that inventory fell to $11.6m from $12.2m last year.

Heelys also announced that its board of directors had completed a strategic review, deciding to continue to operate as an independent company.