Troubled specialty retailer Sharper Image (NASDAQ:SHRP) will report first-quarter 2007 financial results on Monday, June 18. Here's how Wall Street is bringing it into sharp relief.

What analysts say:

  • Buy, sell, or waffle? Of the nine analysts covering the company, three rate it a buy, four say hold, and two call it a sell.
  • Revenue. Sales are once again expected to fall by double-digit amounts. Analysts forecast a 30% drop, down to $74.9 million.
  • Earnings. Earnings, however, are expected to improve -- if you want to call it that -- from an $0.84 per-share loss last year to "only" $0.82 this quarter.

What management says:
Management's actions have been speaking louder than words these days. Last month, a group of investors that includes company chairman Jerry Levin bought more than $37 million worth of stock, bringing its stake in the company to more than 21% of the outstanding shares. Together, Sun Capital Partners and Knightspoint Group -- the two activist shareholders that engineered the ouster of the company founder -- now control more than 40% of the shares.

There's a new president and CEO in charge, and a new CFO as well. The company has finally filed its delinquent financial reports, has put behind it a disastrous PR problem related to its ionic air cleaners, and is inking new deals to put the brand name on innovative products once again (a zero-gravity flight suit sounds like fun and could help recapture some of the uniqueness that used to define Sharper Image).

What management does:
There's little denying that Sharper Image has been a financial basket case. It was run nearly to the edge of ruin by its former founder and CEO, and the shareholder revolt may have been what saved the company from bankruptcy -- or at least staved it off for a while longer. It received new financing from Wells Fargo (NYSE:WFC), new managers, and new products.

But that doesn't necessarily spell relief. What separated Sharper Image from other retailers years ago was its selection of offbeat premium products you couldn't get elsewhere. Yet that's no longer the case. As fellow Fool Rick Munarriz points out, the ubiquity of iRobot (NASDAQ:IRBT) vacuums at Target (NYSE:TGT) and top-shelf consumer electronics at Best Buy (NYSE:BBY) means the novelty -- and higher prices -- of Sharper Image could very well be the nails in its coffin.

























All data courtesy of Capital IQ, a division of Standard & Poor's. Data reflects trailing-12-month performance for the quarters ended in the named months.

One Fool says:
Sharper Image is one company I couldn't see myself investing in, even after the Pay Dirt recommendation. Although the stock has risen nearly 30% since it was selected, this was a company with too many unknowns for me. Even in retrospect, now that it has filed its financial statements, it seems like a risky maneuver.

The company continues to burn through cash, and despite making positive steps, it's still witnessing dramatic declines in sales. Stores might have been freshened and restocked, but I know I find myself passing them by in the malls. There's little in there I equate with a must-have product, and what it does offer, I usually feel I can find cheaper elsewhere. Will people buy Donald Trump steaks from there? At $3,500 a pop (plus tax), how many people these days will really sign up for the thrill of zero gravity? Such offbeat branding has traditionally been the hallmark of Sharper Image, and is in keeping with the company's tradition. But will such products help the stock become a profitable investment going forward? The chances seem slim.

Related Foolishness:

Sharper Image has earned a one-star rating from Motley Fool CAPS, the new investor intelligence community. You can add your voice to the stock-rating service by joining today. It's free!

Best Buy is a recommendation of Motley Fool Stock Advisor. iRobot is a recommendation of Motley Fool Rule Breakers.

Fool contributor Rich Duprey does not have a financial position in any of the stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.