San Francisco-based electronic gifts merchant Sharper Image Corp. (Nasdaq: SHRP) reported lower fourth-quarter and annual earnings amid a slew of fiscal declines for the quarter and fiscal year ended Jan. 31.
For the year, total revenue dropped 12%, to $669.0 million from last year’s $760.0 million. Total store sales decreased 6%, to $407.1 million, while comparable store sales decreased 16%. Catalog/direct marketing sales plunged 33%, to $87.9 million from last year’s $130.5 million. Internet sales decreased 8%, to $107.2 million. Wholesale sales decreased 18%, to $48 million, from $58.4 million. The company’s net loss for the fiscal year was $15.6 million.
For the fourth quarter, overall revenue decreased 12%, to $263.7 million. Fourth-quarter store sales decreased 9%, to $170 million, and comparable store sales decreased 15%.
CEO Richard Thalheimer understated the company’s difficult financial situation. “Fiscal 2005 was a challenging year for the company,” he said in a statement. “Two important merchandise categories, our Ionic Breeze Air Purifiers and our massage chairs, accounted for an approximately $126 million net revenue decrease in 2005 compared to the prior year. Excluding these two categories, our business grew by approximately $35 million in net revenues in 2005, largely driven by sales of new products and branded electronics. The decrease in sales of our air purification products resulted from negative media coverage, increased competition, and a reduction in advertising spend. The decrease in sales of our massage chair line of products was due to pricing pressure from competitors and wider distribution of sub-$1,000 massage chairs in the marketplace.”
Thalheimer added that the company has taken “aggressive action to return the company to profitability” by reducing overhead expenses, capital outlays and discretionary spending, and advertising. (For details of its turnaround measures, see “Dull Performance Shakes Up Sharper Image.”)