Sharper Image

(SHRP)

swung to a first-quarter loss and horrendous earnings guidance Thursday, as demand waned for its high-tech gadgets.

After a brief halt, the stock tanked $3.15, or 22%, to $10.79 on Instinet.

The retailer said after Thursday's closing bell that it lost $4.6 million for the quarter, or 30 cents a share, having earned $1.9 million, or 12 cents a share, in the same quarter last year. The results beat analysts expectations by a penny, according to consensus estimates reported by Thomson First Call, but the company had little to cheer about.

"This first quarter was challenging as we faced comparisons to last year's large sales increases and, like many other retailers, we have been affected by sluggish consumer spending," the company said. "Our balance sheet continues to be strong, with no debt outstanding."

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For the second quarter, Sharper Image expects the red ink to continue, forecasting a loss in a range from 40 to 45 cents a share. Analysts were estimating a loss of 16 cents a share.

For the first quarter, the company posted sales of $144.9 million, down 7% from last year's $156.4 million, and its same-store sales dropped 16%. While it made no mention of the Ionic Breeze products, which have long been the company's main sales and profits driver, its sales declines suggested that the line of air purifiers are still losing favor with consumers.

The retailer acknowledged that its main priority going forward is revamping its product line.

On a conference call with analysts, Sharper Image's founder, chairman and chief executive, Richard Thalheimer, said the company was planning to announce improvements to its beleaguered line of Ionic Breeze air purifiers.

Since the product has served as the company's main profit driver, Thalheimer said, "it would be nice to boost sales of those products."

In its release, the company said: "We are responding to an increasingly competitive landscape by redoubling our efforts to attract customers with unique and exclusive Sharper Image proprietary and Sharper Image branded merchandise, including a lineup of products for iPods and other MP3 players."

"Looking forward, we anticipate that the introduction of new merchandise assortments beginning in the third quarter will contribute to improving trends in the second half of the year."