SAN FRANCISCO-Sharper Image Corp. is scaling back its store growth, planning only six to eight new stores this year compared to 20 new stores last year. Today, the chain has roughly 190 stores.

The decision to reduce new store openings was compelled by poor financial performance and a need to reduce capital expenditures. Fiscal 2005 was the first year since 1990 that Sharper Image posted a net loss. For the year, the retailer lost $15.6 million, or $1.03 per share, compared to last year’s $14.7 million, or 90 cents per share.

“2005 was a difficult year,” said Richard Thalheimer, Sharper Image founder, chairman and CEO during the chain’s earnings conference call. He blamed much of the poor performance on disappointing sales of the Ionic Breeze Air Purifiers and massage chairs. These products accounted for a $126-million net revenue decrease in 2005 compared to the prior year.

Revenues and comp-store sales were also disappointing. Revenues decreased 12% to $669 million from last year’s $760 million. Comparable store sales decreased 16%, while total catalog/direct marketing sales decreased 33% and internet sales decreased 8%.

“Our business is going through a low point–the first quarter won’t be cheerful,” Thalheimer said. The company’s sales performance in March supports his claim. Company sales were $39.1 million compared to $53.1 million in the previous year, a decrease of 26% and comparable store sales in March decreased 29%.

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