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Sharper Image Turns Profit On Record Third Quarter Revenues
Business Editors
SAN FRANCISCO--(BUSINESS WIRE)--Nov. 18, 1999--Sharper Image
Corporation (NASDAQ-NMS: SHRP) today reported record sales and a $1.6
million improvement in net earnings for its third quarter ended
October 31, 1999. Performance highlights include a $0.01 per share net
earnings compared with the prior year's net loss of $0.17 per share, a
15 percent increase in comparable store sales, a 659 percent increase
in Internet sales and nearly a three percentage point increase in
gross margin (excluding the impact on gross margin of wholesale
sales).
For the quarter ended October 31, 1999, total revenues were $58.3
million, an increase of 36 percent from last year's $43.0 million.
Total store sales expanded by 23 percent to $34.6 million from $28.1
million in the prior year, with comparable store sales increasing 15
percent. Internet sales of $5.3 million jumped 659 percent from last
year's $701 thousand. Catalog sales increased 31 percent to $17.9
million from the prior year's $13.7 million. Catalog sales include a
218 percent increase in wholesale sales to $5.7 million from last
year's $1.8 million. The net earnings for the quarter of $148
thousand, or one cent per share improved by $1.6 million compared with
a net loss of $1.5 million or 17 cents per share for the prior year's
comparable period.
As previously reported, the Company discontinued mailings of the
Sharper Image Home Collection catalog which featured furniture and
accessories. Excluding the sales from the Home Collection catalog in
the third quarter of the prior year, total revenues of $58.3 million
in the current quarter were 48% percent higher than the prior year's
pro forma total revenue of $39.5 million and catalog sales increased
74 percent to $17.9 million from last year's pro forma $10.3 million.
"The third quarter's record sales and positive earnings reflect
the popularity of our Sharper Image exclusive products and the
excellent customer response to our advertising programs that
significantly increased the momentum in all three major sales channels
of stores, catalog and Internet," said Mr. Richard Thalheimer,
founder, chairman, and chief executive officer. "The increasing
proportion of sales of proprietary products was a key factor in the
nearly three percentage point increase in gross margin rate over the
prior year, excluding the impact of our lower margin wholesale
business."
"The seven fold increase for the quarter in our Internet sales
also reflects the impact of our new advertising programs, which
prominently highlight sharperimage.com for both our online store and
our Sharper Image online Auction site," Mr. Thalheimer continued.
"We are pleased with the Company's record third quarter sales and
in particular October's 20 percent comparable store sales increase and
nine-fold increase in Internet sales which are indicative of our
accelerating sales momentum as we enter the important fourth quarter,"
Mr. Thalheimer concluded.
Year to date for the first nine months of fiscal 1999, total
Company revenue increased 19 percent to $156.8 million from last
year's $132.2 million. Total store sales of $103.7 million were 17
percent higher than prior year's $88.7 million, with comparable store
sales increasing 11 percent. Internet sales increased 515 percent to
$11.9 million from last year's $1.9 million. Catalog sales of $40.2
million were the same as last year. Included in catalog sales $7.1
million of wholesale sales, an increase 183 percent from last year's
sales of $2.5 million. Excluding sales from the Home Collection
catalog for the prior year, total company revenue of $156.8 million
for the nine month period were 29 percent higher than the prior year's
pro forma revenue of $121.8 million and catalog sales of $40.2 million
were 34 percent higher than last year's $29.9 million. The net loss of
$1.7 million or 17 cents per share for the nine month period ended
October 31, 1999, improved 66 percent from the prior year's comparable
period net loss of $4.8 million or 57 cents per share.
The Sharper Image is a specialty retailer that is nationally and
internationally renowned as a leading source of new, innovative,
high-quality products that make life easier and more enjoyable. A
significant and growing proportion of sales are of proprietary
products created by the Company's product development group, Sharper
Image Design. The Company operates more than 90 stores throughout the
United States and mails millions of its award-winning catalogs each
month. Additionally, the Company's products may be purchased online
via its online store at sharperimage.com. The Company also has an
auction site, where consumers can place a "bid to win" on Sharper
Image products and other selected products. The auction site can be
accessed from the home page of the Company's Web site,
sharperimage.com.
This release contains certain forward-looking statements
regarding the Company's expected performance for future periods, and
actual results for such periods may materially differ. Such
forward-looking statements involve risks and uncertainties, including
risks of changing market conditions in the overall economy and the
retail industry, consumer demand, the opening of new stores, actual
advertising expenditures by the Company, the success of the Company's
advertising and merchandising strategy, availability of products, and
other factors detailed from time to time in the Company's annual and
other reports filed with the Securities and Exchange Commission.
(Financial tables follow)
*T
THE SHARPER IMAGE(R)
FINANCIAL TABLES (Unaudited)
(Dollars in thousands except per share amounts)
Three-Months Nine-Months
Ended October 31, Ended October 31
Statements of Operations 1999 1998 1999
--------- --------- ----------
Revenues $ 58,280 $ 42,955 $ 156,843
Cost of products 29,384 22,404 78,019
Buying and occupancy 6,934 6,397 20,569
Advertising and promotion 6,619 4,906 19,046
General, selling and
administrative 15,286 12,285 42,031
--------- --------- ----------
Operating income (loss) 57 (3,037) (2,822)
Other income (expense)-net 190 603 47
Income tax expense (benefit) 99 (974) (1,110)
--------- ---------- -----------
Net earnings (loss) $ 148 $ (1,460) $ (1,665)
========= ========== ===========
Net earnings (loss)
per share - basic $ 0.01 $ (0.17) $ (0.17)
Net earnings (loss)
per share - diluted $ 0.01 $ (0.17) $ (0.17)
Weighted avg. number
of shares - basic 11,969,000(b) 8,530,000 10,015,000(b)
Weighted avg. number
of shares - diluted 12,707,000(b) 8,530,000 10,015,000(b)
Stores open 91 84
Nine-Months Twelve-Months
Ended October 31, Ended October 31,
Statements of Operations 1998 1999(a) 1998(a)
---------- --------- ---------
Revenues $ 132,238 $ 267,719 $ 228,334
Cost of products 68,927 132,223 119,312
Buying and occupancy 18,995 27,727 25,463
Advertising and promotion 16,322 30,120 26,820
General, selling and
administrative 36,314 64,723 55,199
---------- --------- ---------
Operating income (loss) (8,320) 12,926 1,540
Other income (expense)-net 265 25 107
Income tax expense (benefit) (3,222) 5,181 658
---------- --------- ---------
Net earnings (loss) $ (4,833) $ 7,770 $ 989
========== ========= =========
Net earnings (loss)
per share - basic $ (0.57) $ 0.80 $ 0.12
Net earnings (loss)
per share - diluted $ (0.57) $ 0.74 $ 0.11
Weighted avg. number
of shares - basic 8,473,000 9,685,00(b) 8,443,000
Weighted avg. number
of shares - diluted 8,473,000 10,470,000(b) 8,816,000
Stores open
October 31,
Balance Sheets 1999 1998
-------- --------
Current assets
Cash and equivalents $ 7,325 $ 711
Accounts receivable, net 10,498 7,673
Merchandise inventories 52,166 35,670
Other current assets 15,749 14,099
-------- --------
Total current assets 85,738 58,153
Property and equipment, net 23,605 20,947
Other long term assets 4,262 3,380
-------- --------
Total assets $113,605 $ 82,480
======== ========
Current liabilities $ 42,430 $ 39,580
Revolving loan -- 12,587
Notes payable 2,404 2,548
Other liabilities 3,260 3,101
-------- --------
Total liabilities 48,094 57,816
Stockholders' equity
Common stock 119 85
Additional paid-in capital 43,086 10,043
Retained earnings 22,306 14,536
-------- --------
Total stockholders' equity 65,511 24,664
-------- --------
Total liabilities and stockholders' equity $113,605 $ 82,480
======== ========
(a) Pro forma earnings and pro forma weighted average number of shares
outstanding are presented for illustrative purposes only.
(b) Includes the weighted average impact of 3.0 million shares of
common stock issued July 22, 1999 in connection with the secondary
offering.
*T
--30--mjc/cgo*
CONTACT: The Sharper Image
Jeffrey P. Forgan, 415/445-1583
KEYWORD: CALIFORNIA
INDUSTRY KEYWORD: RETAIL EARNINGS
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