Buyout firm boosts stake in retailer
A buyout firm has doubled its stake in Sharper Image Corp. by buying a large block of stock from the company’s deposed founder, raising the prospect that the ailing specialty retailer might be taken private as it tries to bounce back.
Sharper Image’s stock price shot up by 15% on Thursday after a Securities and Exchange Commission filing disclosed an affiliate of Sun Capital Partners Inc. had paid $13.78 million for 1.49 million shares held in a trust set up by the company’s founder and former chief executive, Richard Thalheimer.
With the deal, Sun Capital supplanted Thalheimer as Sharper Image’s largest shareholder. The Boca Raton, Fla.-based firm now owns a 19.8% stake in Sharper Image, up from 9.8%.
Thalheimer’s nearly 30-year reign at Sharper Image ended last fall amid a severe sales slump that has deepened since his departure. Sharper Image shaved more than $3 million from Thalheimer’s severance package when he left to offset gains that he made in previous years from favorably priced stock options.
Although the San Francisco-based company’s sales have been sagging badly for more than two years, Sharper Image still retains a well-recognized brand that makes the 186-store chain an intriguing candidate for a turnaround, said Cid Wilson, an analyst with Kevin Dann & Partners.
“If you were planning a buyout, this would probably be the time to do it,” Wilson said.
Sun Capital did not comment Thursday.
Many investors appeared to be betting on a buyout as Sharper Image shares rose $1.42 to $10.90 on Thursday.
Marc Leder, Sun Capital co-CEO, joined Sharper Image’s board in January, indicating he is already on the same page with the team that has been trying to fix Sharper Image’s problems. Sharper Image’s board also approved the privately negotiated transaction between Sun Capital and Thalheimer, who sold his stock for $9.25 a share.
Sharper Image is breaking in a new chief executive, direct marketing veteran Steven Lightman, and is about to welcome a new chief financial officer, Rebecca Roedell.
Renowned for its eclectic collection of high-tech gadgets, Sharper Image’s steep slide began after its sales peaked at $760 million in its fiscal year ending in January 2005.
About $250 million in annual sales have evaporated since then, resulting in more than $65 million in reported losses. Sharper Image got off to another rocky start this year as its first-quarter sales plunged 37%.
