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VIDEOSharper Image Files
Overpriced gadgets are out of style.
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Sharper Image Corporation (SHRP), the well-known retailer selling such indispensable consumer staples as massage chairs, high-speed nose hair clippers and ultrasonic rodent deterrents filed for bankruptcy protection late Tuesday night.
Citing “increased competition, narrowing margins, litigation, lower consumer and market confidence, tighter credit from suppliers, and poorly performing stores,” the company’s CFO said it's in a severe liquidity crunch. As of January 31, Sharper Image's balance sheet boasted a measly $700,000 in cash to support almost $200 million in debt.
Sharper Image has hired a new CEO and restructuring experts to close stores, rebuild the business and pay off creditors with a $60 million loan it requested from Wells Fargo (WFC) Retail Finance. According to Bloomberg, on the hook for the company’s debt are vendors United Parcel Service (UPS), Tom Tom Inc. and Garmin International (GRMN) .
In an environment where companies like Bristol Myers Squibb (BMY) and Panera Bread (PNRA) are taking losses on structured credit products, it's concerning to see that sellers of electronic gadgets are the biggest creditors of a troubled retailer.
One of the oft-discussed themes here in the ‘Ville is the change in social moods the unwinding of our debt-based economy is likely to cause. Indeed, consumers’ refusal to purchase ropeless jump ropes and other superfluous, overpriced gadgets shows this shift is already occurring.
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