San Francisco – Richard Thalheimer has stepped down as chairman and CEO of Sharper Image, the proprietary CE specialty chain he founded in 1977.
He was succeeded as chairman by board director Jerry Levin, who will also serve as interim CEO.
The changes were prompted by dissident investors in response to the company’s flagging fortunes. Sales, earnings and market value have cratered over the past two years as its core product, the Ionic Breeze air purifier, was vilified by Consumer Reports magazine, and indoor shopping malls, the bastion of the chain’s 190 stores, lost favor with shoppers. The company’s executive gift-type assortment may have also been overshadowed by the iPod, GPS devices and other successful personal CE products.
The groundwork for Thalheimer’s ouster was laid in May, when the board agreed to nominate three new directors, including Levin, in order to avoid a proxy showdown with shareholders. Levin, who joined the board in July, was previously chairman/CEO of American Household (formerly Sunbeam) and CEO of Revlon. He currently runs a turnaround consultancy, JW Levin Partners, which has been hired by the board to help fix the company’s operating issues.
In a prepared statement, the board acknowledged Thalheimer for his vision, contributions, years of service and past success, and wished him well in his future endeavors.
Besides its market place difficulties, Sharper Image has also uncovered accounting irregularities related to its stock option practices. Pending the findings of a special board-appointed committee, the company has delayed filing its 10-Q report for the quarter ended July 31 and will restate its financial statements for the past three fiscal years. As a result of the delayed filing, the company faces delisting from the NASDAQ securities exchange.
Preliminary results for the quarter, which don’t reflect possible charges stemming from the accounting review, show that total sales fell 22 percent to $107.2 million, same store sales fell 28 percent and losses before income tax benefits reached $21.3 million compared to $11.3 million during the year-ago period.
In a statement Levin said, “Sharper Image has a great brand name and strong customer base. Our immediate priority is to develop and implement a plan of action that takes full advantage of these fundamental strengths and addresses the operating issues facing the company.”