NEW YORK–What does the future hold for Sharper Image?
Will it be a retailer again or will it just be a brand?
Sharper Image was purchased by a joint-venture group consisting of Hilco Consumer Capital, Gordon Brothers Brands and Bluestar Alliance in early June. The three firms paid $49 million for the retailer, which had been in Chapter 11 bankruptcy since February.
Shortly before the deal was finalized, the joint venture announced that liquidations would take place for the remaining 86 Sharper Image stores. Jack Erdos, chief financial officer of Bluestar, said one of the topics that would be discussed by the new owners is whether Sharper Image will be a retailer of some kind. “We could have some retail presence, either brick-and-mortar or online,” Erdos said, “but we have to decide that.”
Erdos and Brad Snyder, principal and managing director of Gordon Brothers, said the new owners are now formulating strategies for expanding the Sharper Image brand. Specifics will be announced in the next few months, both executives said.
Regarding the big picture, “We will set up Sharper Image as a brand for products,” Erdos said. “That’s what we’ve done with other brands to give them new life. We could also expand the brand to products beyond the current core, but only to products that make sense. We don’t want to dilute the brand.” Among the best-known products sold in Sharper Image stores are the Ionic Breeze air purifier, the Razor Electric Scooter and a range of massage chairs.
“We want to make it an international brand,” Erdos said. “Our consumer research has shown that Sharper Image is already a well-known name in Europe and Japan. We want to offer the products it’s already known for, plus we’ll look at expanding into other products that make sense.”
“We recognize that this is an iconic brand, and we want to focus on expanding it,” Snyder said. “We feel so strongly that it has potential for expansion into multiple channels. We will consider every possibility.”
The three partners in the joint venture all have experience with brands in various product categories. Hilco’s portfolio includes Caribbean Joe, Ellen Tracy, Halston and Bombay Brands. Gordon Brothers is known for purchasing and selling and licensing brands and other assets from distressed companies. Bluestar Alliance’s holdings include Liz Lange, Ron Chereskin and Hot Kiss, all apparel brands.
The acquisition has brought a difficult period to an end for Sharper Image. After totaling more than $760 million in fiscal year 2005, sales hit a free fall over the past two fiscal years, dropping 12 percent in 2006 and 26 percent last year, to less than $375 million.
Richard Thalheimer, who founded Sharper Image more than 30 years ago, left the firm in September 2006 and Jerry Levin, a turnaround specialist, became chairman. In April 2007, Steven Lightman was named president and chief executive officer, and it was hoped that Lightman would use his experience with direct-market retailers such as Fingerhut and Crosstown Traders to redirect Sharper Image on a multichannel path.
However, Lightman left Sharper Image in January and was succeeded by Robert Conway, founding member of the financial-advisory firm Conway, Del Genio, Gries & Co. In February, Sharper Image filed Chapter 11 in U.S. Bankruptcy Court in Wilmington, Del., and in April, the court granted the retailer permission to pursue a sale of the assets.
According to one source close to the situation, Levin was among the bidders for Sharper Image in the auction that took place in late May, in partnership with an unnamed venture capital firm. Levin resigned as chairman in April for the purpose of trying to put together a deal to buy the retailer. His bid was “substantially lower” than the winning bid from the joint venture, the source said.