Sharper Image Aired Out
A review of air purifier devices published by Consumer Reports on Tuesday left Sharper Image (SHRP) looking dull on Wall Street.
Shares of the gadget chain dropped $1.18, or 7.5%, to $14.50, as the magazine presented findings that purport to show that Sharper Image's Ionic Breeze Quadra Silent Air Purifier, the latest version of the retailer's bestselling product, does little to clean air and also releases potentially unhealthy levels of ozone.
The report names four other products that supposedly have the same problems, including Brookstone's (BKST) Pure-Ion air purifier. Shares of Brookstone were recently up 40 cents, or 2.5%, to $16.60.
The article comes just two months after Sharper Image agreed to pay the magazine's publisher, Consumers Union, $525,000 in legal costs after a judge dismissed its libel suit. The suit alleged that previous reports published by the Consumers Union that were highly critical of the Ionic Breeze's ability to reduce airborne particles were false and malicious.Monarch Research analyst Cid Wilson said he thought the market was overreacting to the report, since Sharper Image's customers have shown little reaction to criticism from Consumer Reports in the past. "This is the third time this magazine has come out criticizing the Ionic Breeze, and we've seen little change in sales patterns as a result so far," Wilson said (he does not own shares of Sharper Image, and his firm has no investment-banking relationship with the company). "But the company may have shot itself in the foot this time around by bringing the libel suit against the Consumers Union, because that whole thing has just brought more attention to it all." While Sharper Image does not disclose what percentage of its total sales comes from the Ionic Breeze, Harris Nesbitt analyst Rick Weinhart said he estimates the figure is around 30%. He does not expect the report to have a major impact on Sharper Image's performance unless it provokes some sort of regulatory action.
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