Sharper Image files for bankruptcy
Chantal TodéFebruary 20, 2008
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Following years of declining sales, Sharper Image Corporation has
filed for bankruptcy protection under chapter 11 of the Bankruptcy
Code in the US Bankruptcy Court for the District of Delaware.
The company said it will continue to conduct business as usual while
it devotes renewed efforts to resolve operational and liquidity
problems and develop a reorganization plan.
The news follows last week's announcement that Sharper Image has
replaced CEO Steven A. Lightman, who has years of multichannel retail
experience and had been on the job for less than a year, with
turnaround specialist Robert Conway.
The last year Sharper Image reported an increase in comparable store
sales was 2003, when same-store sales posted a 15.3% gain. In fiscal
year 2004, sales increased 17% for a total of $760 million. Sales
started declining sooner afterwards and haven't stopped since. For the
fiscal year ended Jan. 31, Sharper Image said comparable store sales
decreased 13%. Company sales totaled $374.9 million, a decrease of 26%
compared to the previous year.
The company has admitted that part of the problem has been an overly
narrow product selection, with its air purification line of products
generating 40% of revenue in 2004, 27.7% in 2005 and 23.4% in 2006.
Despite recent efforts to diversify its merchandise mix, the company
has been feeling the continued negative impact of customer complaints
over the accuracy of its claims about its air purification products.
Some of those complaints have gone to court.
According to published reports, Sharper Image plans to close 90
underperforming stores as soon as it can liquidate inventory at the
sites.