Sharper Image seeks bankruptcy protection; company explains what went wrong
James Temple | Source: San Francisco Chronicle
The 184-store chain “is in a severe liquidity crisis,” according to a Chapter 11 filing submitted to the U.S. Bankruptcy Court in Wilmington, Del., on Tuesday, signed by Chief Financial Officer Rebecca Roedell. The company is seeking permission from the court to shutter 90 stores and sell off inventory.
Sharper Image’s declining financial state “may be attributed, in significant part, to its air-purification products,” the filing said. Such items represented 9.4 percent of the company’s revenue in fiscal 2007, down from 27.7 percent in 2005, it said. The company, which has about 2,246 employees in the United States, listed $251.5 million in assets and $199 million in debts.
In addition to challenges on the Ionic Breeze front, high-tech products have lost much of their novelty and have become the purview of discounters like Target Corp., Wal-Mart Stores Inc. and Costco Wholesale Corp., said Kurt Barnard, president of Retail Forecasting LLC of New Jersey. The company also has faced growing competition from stores with similar models, including Hammacher Schlemmer and Brookstone Inc., which introduced a less-expensive air purifier.
“The Sharper Image is no longer alone in pioneering the field of new and exciting items,” Barnard said. “They have found it increasingly difficult over the last couple of years to hold onto their customers.”
He said it’s unlikely the company will ever emerge from bankruptcy protection.
The slowing economy and growing fears of a recession are contributing to Sharper Image’s woes, as shoppers become increasingly cost conscious, said Nina Gruen, executive vice president and co-founder of San Francisco research firm Gruen Gruen + Associates.
“They’re not going out and spending frivolously right now,” she said. “Impulse today is gasoline. They’re not about to buy Sharper Image.”
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