Levin Resigns, Wants to Buy Sharper Image

Apr 10, 2008 7:44 PM  By

Jerry Levin resigned today as chairman of The Sharper Image, and has informed the company that he and a group of investors are interested in acquiring some or all of the troubled high-tech gifts and gadgets merchant’s assets.

According to a company statement, recently appointed CEO Robert Conway said San Francisco-based Sharper Image would give full consideration to any proposal, but wouldn’t assure any such proposals were coming.

Stuart Rose, managing partner for Wellesley, MA-based investment bank Tully & Holland, said Levin’s resignation is a good sign that Sharper Image may not disappear into the retail sunset.

“Levin would be very high up on the prospects because knows the company inside and out–including all its warts and its potential,” Rose said. While Sharper Image will come out of Chapter 11 much smaller than it went in, “this is a good sign that the company will be restructured and sold.”

Lee Helman, managing director of New York-based investment bank Finaco, agrees with Conway’s statement that Levin’s group may not necessarily become the new owner. Although the company suffered massive financial losses during the past decade, as shown in its financial statements, Helman says Sharper Image is still a hot property.

There are multiple parties circling, all with varying degrees of interest in various pieces of the company,” Helman said. “It will be sold to the highest bidder.”

Sharper Image filed for Chapter 11 in February. In an affidavit filed in the U.S. Bankruptcy Court for the District of Delaware, the merchant’s chief financial officer Rebecca L. Roedell said the company incurred declining sales since 2004 and net losses in each of the past three fiscal years. The bankruptcy petition lists total assets of $251.5 million and total debts of $199 million, as of Jan. 31.

Levin joined Sharper Image in July 2006 as a member of the board of directors, and became chairman/CEO two months later, replacing founder Richard Thalheimer. Though Levin made his niche as a turnaround specialist and helped revive Sunbeam (now American Household) back in 1998, sales and profits continued to tumble at Sharper Image.

Since January 2005, Sharper Image’s annual sales have slipped more than 50%, from $776 million to less than $400 million. For the fiscal year ended Jan. 31, 2008, total company sales fell 26%, to $374.9 million, compared to $506.7 million a year ago.