SAN FRANCISCO-Sharper Image is looking to new merchandise rather than new stores to bolster dramatically lower sales and profits this year.

The company will introduce 50 to 60 new products a month in a wide range of price points, even through the summer selling season, said senior executives at the second conference call in 30 days to discuss first-quarter sales. In addition, the merchandise mix is more likely than in the past to appeal to women and children.

“We had not really had a significant change in merchandising in the last three years,” said Richard Thalheimer, Sharper Image founder and CEO. “Now, the stores are starting to look different every day.”

In recent years, the retailer had focused largely on Ionic Breeze air purifiers and massage chairs. Recent sales results reflected market saturation and greater competition in those segments, he said. Total company revenues for the quarter ended April 30, 2006, were $106.8 million compared to $144.9 million in 2005, a decrease of 26%. Comparable store sales declined 29%. Sharper Image reported a net loss of $12.6 million for the quarter versus a loss of $4.6 million in 2005.

Results should improve in the second half of the year, particularly the fourth quarter, as the influence of the new product becomes apparent. New merchandise includes water purification and food storage systems, likely to appeal more toward women. In addition, the company has introduced a section devoted to items costing as little as $6, to encourage impulse buying by and for children. The growing focus on the woman shopper is in part attributable to store location.

“As we open up more stores in lifestyle centers, it seems roughly that the shoppers there are [50% male/50% female,” Thalheimer said. “If we catered only to men, they wouldn’t do any business.”

Previously, the company had said six to eight new stores were planned for the year; that now is more likely to be six new stores, said Tracy Wan, president and COO. The company has already opened stores at Arrowhead Towne Center in Glendale, AZ, and at the Chesterfield Mall, in Chesterfield, MO.

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