A Sharp Downturn for Sharper Image
According to a recent article in Forbes, Sharper Image may be heading into some financial trouble. Less than one month ago, Sharper Image shares plummeted 31.2% as a result of a news report which stated that the company may go bankrupt.
For the past two years, the company has seen sales steadily decline due to an onslaught of bad publicity, lawsuits, and a sub par range of merchandise. In 2005, Consumer Reports published an expose criticizing Sharper Image’s Ionic Breeze air purifier, and in response, Sharper Image retaliated with a libel suit against the magazine’s publisher. Unfortunately, they lost.
Since 1999, Sharper Image has sold an astounding 3.2 million units of the Ionic Breeze, and this product once made up almost 40% of the company’s total revenue. However, in 2005, a class action lawsuit was then filed by consumers who claimed Shaper Image misled them into purchasing the high-tech air purifier. Consumers felt that the Ionic Breeze did not perform up to the company’s claims that these air purifiers would clean the air of airborne contaminants such as allergens, pollutants, and indoor odors.
Finally, in January of this year, Sharper Image agreed to issue a $19 dollar merchandise credit to the 3.2 million customers who have purchased the Ionic Breeze since 1999, as well as an “Ozone Guard” attachment for floor models of the Ionic Breeze. However, Michael Tein, an attorney representing about 2 million customers in a separate lawsuit in California, argues that these customers should instead be compensated in cash, instead of having to spend more money at the high-tech gadgets retailer.
It is speculated that Sharper Image may go bankrupt as a result of this separate lawsuit which will end up costing them $900 million. Nevertheless, in response, Sharper Image issued a statement saying that this was “speculative,” and that such a settlement would not force their company into bankruptcy. Until then, consumers will just have to wait, as at this point in time, U.S. District Judge Cecilia Altonaga will have to decide whether the already agreed-upon settlement will be sufficient.
For the past two years, the company has seen sales steadily decline due to an onslaught of bad publicity, lawsuits, and a sub par range of merchandise. In 2005, Consumer Reports published an expose criticizing Sharper Image’s Ionic Breeze air purifier, and in response, Sharper Image retaliated with a libel suit against the magazine’s publisher. Unfortunately, they lost.
Since 1999, Sharper Image has sold an astounding 3.2 million units of the Ionic Breeze, and this product once made up almost 40% of the company’s total revenue. However, in 2005, a class action lawsuit was then filed by consumers who claimed Shaper Image misled them into purchasing the high-tech air purifier. Consumers felt that the Ionic Breeze did not perform up to the company’s claims that these air purifiers would clean the air of airborne contaminants such as allergens, pollutants, and indoor odors.
Finally, in January of this year, Sharper Image agreed to issue a $19 dollar merchandise credit to the 3.2 million customers who have purchased the Ionic Breeze since 1999, as well as an “Ozone Guard” attachment for floor models of the Ionic Breeze. However, Michael Tein, an attorney representing about 2 million customers in a separate lawsuit in California, argues that these customers should instead be compensated in cash, instead of having to spend more money at the high-tech gadgets retailer.
It is speculated that Sharper Image may go bankrupt as a result of this separate lawsuit which will end up costing them $900 million. Nevertheless, in response, Sharper Image issued a statement saying that this was “speculative,” and that such a settlement would not force their company into bankruptcy. Until then, consumers will just have to wait, as at this point in time, U.S. District Judge Cecilia Altonaga will have to decide whether the already agreed-upon settlement will be sufficient.
Labels: air_purifiers
Digg
Del.icio.us
Technorati
Furl
Reddit
Spurl
Links to this post:
Create a Link
<< Home