THE IMAGE MAKER Jan 1, 2008 12:00 PM
, By Jim Tierney
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The once-iconic brand Sharper Image has in recent years become about as passé as the razor scooter it rode the decade in on. After peaking at $760 million for its fiscal year ending in January 2005, sales at the high-tech gifts and gadgets marketer have been in a free-fall.
The dismal financials prompted the company's board to boot founder/chairman/CEO Richard Thalheimer in September 2006. As the merchant's sales and profits sank further throughout the next year, many industry watchers had one question about Sharper Image: Who's going to clean up this mess?
That would be Steven A. Lightman. The former president of multititle apparel mailer Crosstown Traders, Lightman was named president/CEO of San Francisco-based Sharper Image Corp. in April 2007.
Although he has played a key role in turning around several catalogs, Lightman spent most of his career with downmarket apparel merchant Arizona Mail Order. And selling lower-end clothing to mature women is about as far away as you can get from marketing upscale “toys for big boys.”
So who is Steve Lightman, how did he get this job, and what is he planning to do with Sharper Image?
A BRIEF HISTORY OF LIGHTMAN
Lightman, who started his direct marketing career at Arizona Mail Order in 1982, became president of the company when it was acquired by general merchant Fingerhut Cos. in 1998.
He oversaw the January 1999 purchase of apparel catalogs Bedford Fair and Willow Ridge from a bankruptcy sale, and Fingerhut's acquisition of Lew Magram and Brownstone Studio in March 2000.
Lightman was named executive vice president of Fingerhut in November 2000; he helped guide the cataloger out of financial straits caused by problems in its credit business.
In October 2002, Lightman and former Fingerhut president Michael Sherman worked with JP Morgan Partners, a division of JP Morgan Chase & Co., to help it buy the Arizona Mail Order catalogs and food gifts title Figi's from Federated Department Stores, which owned Fingerhut at the time.
This created Crosstown Traders, which was acquired by Charming Shoppes in 2005. Lightman was president of Crosstown from its inception until he left in January 2007.
A chance dinner meeting brought Lightman to Sharper Image. “I left Charming Shoppes and was going to take a year off and play golf,” Lightman says. “I was at a dinner and sat next to Jerry Levin,” the retail turnaround specialist and Sharper Image board member who had replaced Thalheimer as chairman and interim CEO.
“Jerry said he didn't understand the direct-to-consumer business — his is a retail background,” Lightman notes. “One thing led to another, and the company excited me. I started meeting with board members and they made me an offer.”
Does Lightman know what he's up against?
He says he had no illusions about the state of Sharper Image when he accepted the position. “Previously, the company was run by a different set of disciplines,” Lightman says. “When I got the company, it was broken.”
How bad is it? At $60.0 million, Sharper Image's loss for fiscal 2006 was nearly four times that of its 2005 loss of $16.1 million. For its third quarter ended Oct. 31, 2007, total sales sank 35%, to $69.5 million, compared with $106.2 million in the third quarter of 2006. The net loss was $22.7 million, nearly the same as the net loss of $22.1 million in 2006.
For the nine-month period ended Oct. 31, total sales decreased 32%, to $217.4 million, compared to $320.2 million for the period in 2006. The company reported a net loss of $60.2 million, compared to a net loss of $49.4 million in the prior fiscal year's nine-month period.
How's Lightman going to fix it? He started by looking at merchandising and marketing. “What's the value proposition to customers?” he says. “I have experience in a dire straits environment. The most important thing you have to remember in a turnaround business is that the only thing you can count on is surprises, and you can't overreact.”
You need to look at what you have “and go through the fundamentals of multichannel marketing,” he says. Keep in mind that the customer is at the top of the pyramid. “Then make a clear, consistent message around the customer, and deliver a high quality product.”
Hiring new management was another priority. “We didn't really have a management team,” and middle management was “starved for leadership,” Lightman says. The process took nearly seven months.
Who are the key personnel on the Sharper Image management team? Rebecca Roedell, chief financial officer; Drew Reich, executive vice president, merchandising; Joyce Maruniak, senior vice president, operations; Gary Chant, senior vice president, human resources; Jim Sander, chief legal officer; John Spotts, vice president, licensing division; John Yotnakparian, senior vice president, retail; and Mark Brodeur, vice president, visual presentation.
