Huffy Toughie

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Shareholders, don your protective headgear. Outdoor sports specialist Huffy (NYSE: HUF) warned Wall Street that the road ahead may be too bumpy to navigate, even for the most nimblest of its fleet of bikes, skates, and scooters. With sales slowing and margins getting crunched, it isn't shaping up to be such a banner year for Huffy.

It was only three holiday seasons ago that Huffy and its Micro scooters were riding the trend of rival Razor. The companies were selling scooters for $99 and they couldn't keep them in stock. Nowadays, you can find similar rides for $20-$30.

While Huffy has attempted to upgrade its scooter business by playing a more active role in higher-priced motorized scooters and diversifying its product lines through acquisitions and licensing deals, it's been a rough go for Huffy.

Investors, however, have been surprisingly spared. The stock is trading just where it was back in January when the company's 2003 outlook was pegged at producing earnings between $0.55 and $0.65 a share.

How bad have things gotten? Last night, Huffy's full-year profit forecast has come down to no more than $0.20 a share, and that sum is padded thanks to a favorable legal settlement.

Huffy is in a bad spot right now. If you've got a young boy on your holiday shopping list, odds are that "a shiny new bike" on his wish list has been replaced by video games. Sony's (NYSE: SNE) PlayStation2, Microsoft's (Nasdaq: MSFT) Xbox, and Nintendo's GameCube and GameBoy Advance SP should be brisk sellers this season along with their related software titles.

You can argue that today's youth have become a sedentary lot. Odds are that they are too wrapped up in their game of Electronic Arts' (Nasdaq: ERTS) Madden 2004 or Activision's (Nasdaq: ATVI) True Crime to get up and argue otherwise.

Huffy could surely use a new generation inspired by Tony Hawk to take up some real extreme sports rather than emulate Tony via the game controller. Until that day arrives, Huffy's road isn't going to get any smoother.

Are video games really to blame for our country's out-of-shape ways? Do you see traditional toys like Huffy gaining or losing market share to the video game companies in the coming years? All this and more -- in the Video & PC Games discussion board. Only on Fool.com.