Just when you think Sharper Image (NASDAQ:SHRP) has bottomed out, the floor caves in and a new basement is discovered. The kitschy consumer electronics retailer suffered through another month of shopper defections last month. Same-store sales fell by 7% over the five-week period.

The company somewhat conveniently cuts off its press release archive at the start of 2007. I can't say that I would blame them. I, too, would hate to look back at the kind of comparable carnage that Sharper Image has left in its wake. However, harder-to-bury SEC filings show that Sharper Image has suffered through precipitous second-quarter slides in each of the two previous fiscal years.

If you don't believe me, look up at the hole the company just fell through. You'll see several other holes that gave way under the weight of its bloating irrelevance.  

At this point, I should tell you that I've got some bad news and some good news. The bad news is that as poorly as Sharper Image is doing at the store level, it's losing even more ground in its mail-order and online business. The good news? Well, you're now just a few paragraphs away from finishing this story, and hopefully moving on to read about a company that's actually doing all right.

The pain is sharp all over
June sales fell a whopping 21% at Sharper Image. Catalog sales fell by a staggering 50%, while SharperImage.com orders suffered a troublesome 31% slide. The numbers aren't necessarily as bleak as they first appear, though. A penny-pinching company like Sharper Image would be justified in cutting back on catalog shipments and online lead-generating campaigns through Google (NASDAQ:GOOG) and Yahoo! (NASDAQ:YHOO).

Sure, I punch in "air purifier" on Google, and Sharper Image still comes up as the first paid-search ad, as well as the first non-paid organic listing. But the sluggish retailer is probably scaling back on less obvious keywords. Searches for a "massage chair" or "household robot" come up Sharper Image-free, for instance. iRobot (NASDAQ:IRBT) appears to be the top advertiser for the latter keyword, if you're curious.

June's results are actually a relative improvement to steeper declines in all of Sharper Image's areas through the first four months of the fiscal year.

Battling back with bricks
The heady catalog and Web slides are certainly problematic. Even if the company is scaling back on marketing those distribution channels, it's undeniable that the Sharper Image brand is less popular, and even less relevant these days.  

However, companies can very well buy their way out of those funks. Let's focus on the store-level malaise, because that's the key to Sharper Image's potential turnaround. Perpetual rides down the chutes on comps hurt at the mall level, because salaries, rent, and utilities aren't getting any cheaper. Mall operators aren't seeing a 9% decline in foot traffic, so obviously Sharper Image isn't doing a good job of winning even when the playing field is level.

Consumer electronics retailing isn't the easy layup it used to be. RadioShack (NYSE:RSH) is a mess. Even the once-unsinkable Best Buy (NYSE:BBY) appears to be taking on some water. Sharper Image offers a hipper, higher-end approach, but its poor showings in recent years indicate that the concept isn't as hip or high-end as it thinks it is.

The company isn't sitting still. Executives have been reshuffled over the past year, but if the concept isn't willing to look radically different in a couple of years (or take drastic steps to make itself appear relevant again), it'll just be that cavernous box in suburbia, squandering its mall tenancy wedged between an Aeropostale and a babyGap.

Nobody wants that.

After a few years of sandbagging, investors keep holding on to the hope that it won't take much to show an uptick in comps again. It's a good dream. Then the shiatsu massage chairs start to vibrate, the ground starts to rumble, and it's time to fill out the change-of-address card to a humbler adobe that's yet another level -- and another hole -- lower.   

Some earlier nails in the Sharper Image coffin:

iRobot is a cutting edge pick in the Rule Breakers premium growth stock service. Best Buy and Yahoo! are Stock Advisor selections. And even Sharper Image got the nod from our Hidden Gems Pay Dirt service.

Longtime Fool contributor Rick Munarriz can't recall the last time he was compelled to set foot inside a Sharper Image. Really. He does not own shares in any of the companies in this story. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.