Sharper Image files for bankruptcy
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.