The Sharper Image

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The Sharper Image
Type	Public
Founded	San Francisco, CA 1977
Headquarters	San Francisco, California
Key people	Steven A. Lightman, President and CEO;
Industry	Retail
Revenue	▼ US$525.25 million (2007)
Operating income	▼ -US$98.52 million (2007)
Net income	▼ -US$59.89 million (2007)
Employees	2,500
Website	www.sharperimage.com

The Sharper Image Corporation (NASDAQ: SHRP), founded by Richard Thalheimer, is a specialty retailer that operates throughout the United States. The Sharper Image has been in business since 1977, and publicly traded since 1987. The company is headquartered in San Francisco, CA, and employs 2,500 people nationwide.

The company sells through retail stores throughout the United States, a monthly catalog, and its website. The company also has business-to-business sales teams for marketing its products for corporate incentive programs and wholesale to retailers.

On February 19, 2008, the company filed for Chapter 11 bankruptcy, blaming low sales aggravated by a decline in consumer spending and negative publicity surrounding its Ionic Breeze air purifiers.^[1] Sharper Image indicated that stores in economically impacted areas will be closed immediately. As of June 1, 2008, 96 of the company's 186 stores nationwide have completed the liquidation process and have since closed. The remaining stores and company assets have been acquired by Hilco Merchant Resources and Gordon Brothers Group. Liquidation sales in the remaining Sharper Image stores are currently underway.

1 History
2 Bankruptcy
3 Retail stores
4 Advertising and business
5 Consumer Reports lawsuit
6 Trump Steaks
7 References
8 External links

[edit] History

The Sharper Image Corporation is the brainchild of Richard Thalheimer. The company started as a catalog business to sell jogging watches.^[2] He started his advertising in running magazines, and within 2 years he had made his first million. This inspired him to start The Sharper Image.^{[citation needed]}

The year 2006 saw a shakeup in the board of directors of the company, including the removal of Richard Thalheimer as CEO.^[3]

Thalheimer was replaced by Chairman Jerry W. Levin, under whom Sunbeam Products/American Household had filed for bankruptcy in 2001.^[4]

On April 9, 2007, Steven A. Lightman became the President and CEO.^[5] In May 2007, the company announced the hiring of Rebecca Roedell as Chief Financial Officer.^[6]

Levin is also Chairman & CEO of JW Levin Partners LLC, a management and investment firm, since February 2005, and Vice Chairman of Clinton Group, a private diversified asset management company, since December 2007.[1] On February 8, 2008, 11 days before he announced the Sharper Image bankruptcy filing, JWL Partners Acquisition Corp., a SPAC, or special purpose acquisition company, submitted an IPO filing. The filing showed US$200 million proceeds targeted. The underwriting group is listed as Credit Suisse and Ladenburg Thalmann & Co. They have applied to list under the ticker “JWL.U” on the American Stock Exchange. The filing states that the blank check corporation intends to acquire or acquire control of one or more businesses.[2][3]

On April 10, 2008, Levin resigned as a member and Chairman of the Board of the company to pursue participating with other investors to acquire some or all of the company’s businesses or assets.[4] But, as has been pointed out, "Levin hasn't made a lot of money for the investors of Sharper Image he's teamed up with so far, including hedge fund Ramius Capital, which helped bring him in as a director, and Clinton Group, which announced a large stake in December."[5] Under Levin, the company's stock price had fallen from about $40 three years ago to about 23 cents (a "paltry" $3.6 million market capitalization) at the time of his departure, on the over-the-counter pink sheets.[6]

In 2008, Thalheimer created his own e-commerce site http://richardsolo.com, which has no affiliation with The Sharper Image, and sells items that were typical of the Sharper Image when its focus was offbeat consumer electronics.

[edit] Bankruptcy

On February 19, 2008, The Sharper Image stock reached an all-time low of 41 cents a share, followed by 29 cents a share on February 20, 2008. On February 25, 2008, The Sharper Image announced it had received notification that it would be delisted from the NASDAQ exchange. The company filed for protection with the U.S. bankruptcy court in Wilmington, Delaware. Sharper Image said it had $251.5 million of assets and $199 million of debts as of Jan. 31, according to the filing.^[7] Cash on hand totaled about $700,000.^[8]

A joint venture led by units of private investment firms Hilco Consumer Capital Corp and Gordon Brothers Group have won a bankruptcy auction to acquire the assets of gadget retailer Sharper Image Corp SHRPQ.PK, a lawyer for Sharper Image said on Thursday.^[when?]

The firms will pay $49 million plus some contingent recovery for assets of the gadget retailer, according to Harvey Miller, an attorney with Weil, Gotshal & Manges, LLP, who is representing the company.[7]

[edit] Retail stores

The company had 184 locations nationwide, which represented close to 60% of the total company revenue.^{[citation needed]} In the last few years more and more retail revenue share had been taken over by internet shoppers and Sharper Image's Ebay operation.^{[citation needed]} After filing Chapter 11, The Sharper Image liquidated 96 of its stores, leaving only 88 stores still functioning under the company's ownership as of May 28th, 2008.

[edit] Advertising and business

The Sharper Image's advertising budget was spent on the catalog for about the first 20 years of its existence.^{[citation needed]} Once products like the Ionic Breeze were introduced, the company realized that "infomercials" were a great way for their products to get some air time. Most other products in the home air purifier market (including those made by Oreck) already used this medium, so The Sharper Image followed.^{[citation needed]} This move proved to be well thought out and executed, as it boosted sales tremendously. However, whenever the company decides to end certain sales, they do so at the store level. This means that the "infomercial" still showing around the world talks about the sale that has technically ended. This has always made employees a little fed up with their company, since they aren't allowed to honor the sale, until the customer mentions the ad they saw on TV.^{[citation needed]}

The company is known to receive special supplier contracts. For instance, its HW551 and HW552 product code massage chairs are specific to The Sharper Image, and Human Touch Interactive do not sell those specific chairs to any other retailer. Ever since the Robosapien was released on the market a few years ago, The Sharper Image has received the exclusive rights to sell the "Signature Series", Robosapiens in chrome or blue-chrome, as opposed to the standard white models that are sold in other stores.

[edit] Consumer Reports lawsuit

In 2002, Consumer Reports tested many fan-driven air purifiers alongside The Sharper Image's Ionic Breeze Quadra. The Sharper Image was not happy with the results, and sued Consumer Reports in order to get what they thought would be a more fair testing of the product.^[9] However, the suit was dismissed, primarily due to the court finding that the company "has not shown that the test protocol used by Consumers Union was scientifically, or otherwise, invalid," and had not "demonstrated a reasonable probability that any of the challenged statements were false." Furthermore, Sharper Image could not "come forward with any evidence from which a finding of malice could be made."^[10]

Two years later, Consumer Reports stated that the Quadra could be dangerous to consumers' health, because of the trace levels of ozone produced by the unit. ^[11] As a result, sales plummeted, and the stores took back units that were even years old for a cash refund. The Sharper Image's response was to work with the Engelhard Corporation and create an ozone catalyst that would reduce the purified air of excess ozone before it circulated throughout the room.^[12]

[edit] Trump Steaks

In early 2007, The Sharper Image entered into a partnership with Donald Trump to be the "exclusive" sellers of Trump Steaks.^[13] Trump Steaks were actually steaks purchased from food industry supplier Buckhead Beef, re-packaged with the Trump brand, and re-priced higher. They were available in five different packages, ranging in price from $99 to $1,000. The packages were delivered via mail in dry ice packaging within two business days of the purchase. The steaks are now only available through online purchase.