Could Sharper Image Be Headed For a Turnaround?

Soleil's Hudson Square Research comments on Sharper Image (SHRP) after they had the opportunity to join several members of co's management at the New York launch party for Trump Steaks, a new exclusive product agreement for Sharper Image.

Firm's conversations led them to believe that recent management changes, along with out-of-the-box thinking, are beginning to paint a rosier long-term picture for the company than the near-term suggests. However, persisting sales weakness and consequential pressures on the balance sheet lead the firm to remain cautious for the time being.

One of firm's key concerns with Sharper Image over the past 18 months has been the company's lack of exciting new product offerings, especially in the face of declining sales in both its Ionic Breeze line and massage chairs. While recent announcements aren't likely to be primary revenue drivers, in firm's view, they do believe that they possess the necessary cachet to reinvigorate the product buzz historically associated with Sharper Image's offerings.

The opinion from the employees the firm spoke with was unanimous. The company seems to have a better sense of hierarchy, reporting channels, and accountability since the management and Board changes have taken place, which they view as a positive.

They expect near term sales performance to remain weak despite the company appearing to edge closer to a potential inflection point in its turnaround process. They expect weak April comps on Thursday and reiterate Hold rating.

Notablecalls: The comp performance at SHRP has been just awful. Steven Lightman was appointed as chief executive and president on March 26, causing the stock to gain some ground. The rally was short-lived as SHRP reported -29% comp number for March and a delayed the release of its 10K.

I don't think the comp number to be reported tomorrow will be any better. L-T who knows, maybe Lightman can turn this ship around. Some of Soleil's comments look to point that way.

SHRP 1-yr chart