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Blaming a struggling economy and less than expected holiday sales, specialty retailer Sharper Image, and catalog merchant Lillian Vernon, both have filed bankruptcy. Nationwide, consumers are spending less on retail items. Some analyst believe that in addition to the shaky economy, rising gas prices and weakening house markets are partially to blame for consumers clutching more tightly to their hard earned dollars.
Sharper Image is based in San Francisco and will close just under half of its retail stores, once their inventories have been depleted. Recently a class action settlement was rejected, having to do with Sharper Image’s popular air purifier, and this caused their stock price to decline, which lead to further shaken confidence in their vendors and suppliers. Company officials claim that the retailer will continue to operate as usual while developing a reorganization plan.
The class action lawsuit began when a mother of children with respiratory health ailments sued on the grounds that the Ionic Breeze air purifier did not perform as advertised by Sharper Image, and claimed the air purifier did not conform to federal ozone emissions regulations. The air purifier is a machine that uses electrostatic technology and claims to clean the air of irritants, allergens, odors, pollutants, while freshening the air. Interestingly enough, when Consumer Reports magazine rated the model as “poor,” Sharper Image sued the magazine.
At Lillian Vernon, the company has been experiencing lower profits and increased costs over the past ten years. Company executives have still not decided if it’s in their best interest to liquidate or sell completely. The recent holiday season was described as a typical cycle, however it wasn’t enough to stabilize their future.
Taking another dramatic step, Sharper Image appointed a crisis management expert as the top company executive, while Lillian Vernon laid off 50% of its work force.
Additional Reading:
The Sharper Image Bankruptcy: How failing to create customers can undermine a brand
What happened to Sharper Image?
Just Hand Brookstone your Sharper Image Gift Card
Chapter 11: More on Lillian Vernon
Sharper Image Bankruptcy Renews My Faith in Basic Consumer Intelligence
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