SAN FRANCISCO – Sharper Image Corp. (Nasdaq: SHRP), the upscale bricks-and-clicks retailer with stores at Providence Place and 183 other locations nationwide, today announced it has filed for Chapter 11 bankruptcy protection.
“The company intends to continue to conduct business as usual while it devotes renewed efforts to resolve its operational and liquidity problems and develops a reorganization plan,” Sharper Image said in its Feb. 20 announcement.
But in papers filed last night with the U.S. Bankruptcy Court for the District of Delaware, Chief Financial Officer Rebecca Roedell said the 31-year-old retailer is looking to shed 90 unprofitable stores and sell off inventory as it struggles with “a severe liquidity crisis,” Bloomberg News reports.
It was not clear whether the Providence store would be affected. Sharper Image did not immediately respond to PBN’s requests for comment.
Sharper Image has lost more than $134 million since early 2005, the company said. It blamed the effects of bad publicity from lawsuits over its Ionic Breeze air purifiers, a problem Roedell said “has been compounded by the ever-tightening and volatile credit and financing markets.”
Its filing reportedly listed assets of $251.5 million and debt of $199 million, saying $27.1 million in unsecured debt is held by 20 creditors. Leading the list are United Parcel Service, with a bill of $6.7 million. Filling out the top five are Quebecor World (USA) Inc., $3.6 million; care navigation systems makers Tom Tom Inc. and Garmin International Inc., $2.1 million apiece; and Novus Print Media Inc., $1.7 million.
On Thursday, Sharper Image announced it had replaced CEO Steven A. Lightman with turnaround specialist Robert Conway and retained a team of specialists from his firm – Conway, Del Genio, Gries & Co. LLC – “to assist Mr. Conway in addressing business improvements and help implement necessary operational changes.” Jerry W. Levin, who took over when founder Richard Thalheimer was ousted in 2006, remains as board chairman, the company said.
Sharper Image, which competes with fellow gadget vendors Brookstone Inc. and Hammacher Schlemmer, has grown “tired,” retail consultant Emanuel Weintraub told Bloomberg News.
“In the world of providing products that consumers don’t have to replenish, you have to keep your merchandise fresh,” Weintraub said. “With everything going on in the world right now, consumers are less frivolous than they would be at a different time.”
The same trends were cited by Virginia Beach-based catalog retailer Lillian Vernon. It filed for Chapter 11 protection today, citing rising costs and lower-than-expected revenue. Lillian Vernon said it has hired Gruppo Levey Co. to look into a sale. The retailer’s parent company – leveraged-buyout specialist Sun Capital Partners – has not sought bankruptcy protection.
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UPDATE: The Nasdaq Stock Market responded to the Sharper Image announcement by ordering the company’s shares delisted, “in light of the company’s filing for protection under Chapter 11 of the U.S. Bankruptcy Code and concerns about the residual equity interest of the existing listed securities holders and the company’s ability to sustain compliance with all of NASDAQ’s listing requirements,” Sharper Image said in a Feb. 25 announcement.
Trading in Sharper Image common stock will be suspended at the opening of business on Friday, Feb. 29, unless the company requests an appeal of the Nasdaq decision.
“The company does not intend to appeal Nasdaq’s delisting decision, and expects that its common stock may continue to trade on the over-the-counter market,” after Feb. 28, Sharper Image said.
The Sharper Image Corp. (Nasdaq: SHRP) is a retailer of innovative products for home, office, personal care and recreational uses, mostly through its184 Sharper Image stores nationwide, its award-winning monthly catalog; and its Web site, www.sharperimage.com.
