What a difference a year makes. Sharper Image (NASDAQ:SHRP) was rockin' this time last year, but recently, the story has changed. Although many investors are willing to bet that the worst is over for the retailer, yesterday's earnings figures don't seem to add very much new clarity to the situation.

Sharper Image's fourth-quarter earnings certainly don't look like much -- net income dropped 26% to $16.4 million, or $1.01 per share. Revenue increased by 8% to $301 million. For the quarter, gross margin dipped and same-store sales dropped by 6% -- April's same-store sales alone were down by a whopping 18%. However, this is likely not a surprise to many investors, since many of us probably already knew that the holidays weren't so merry at Sharper Image.

However, the company did do better than its previous guidance had suggested it would, and that seems to be the reason that some investors chose the silver lining over the cloud today.

When it comes to checking out that silver lining, remember that the company is run in a conservative manner. (We've mentioned that before here at the Fool.) For example, Sharper Image doesn't have any debt, so there are no high-interest repayments bogging things down. Cash and short-term investments stood at $94 million at the end of the year.

In its press announcement, the company cited the difficult comparisons with this time last year, but part of the explanation that might not quite wash: "The economy and customers' willingness to spend still appears to be sluggish, as evidenced by reported light traffic in shopping centers," said founder, Chairman, and Chief Executive Officer Richard Thalheimer.

Try telling that to some of the luxury retailers that have done quite well in the environment that has existed for the past year or so. Both Sharper Image and its rival Brookstone (NASDAQ:BKST) have both faced some sluggish sales, but the company also admitted that some new products didn't resonate with consumers as well as was hoped.

Meanwhile, Sharper Image faces a series of shareholder lawsuits. Among them is the allegation that the company's management made "false and misleading statements" about some areas of the company's business, including sales of the important Ionic Breeze air purifier. Companies that disappoint investors often face such lawsuits, which can often be a dime a dozen. However, Thalheimer said in the company's conference call that while it believes the suits are without merit, the existence of such lawsuits limited his ability to speak freely about certain issues. That seemed to imply that the suits might be more than just a slight nuisance.

Although some investors reacted positively to the earnings today, resulting in a pop in the share price, things in reality seem to be just as they were back in February, when Fool contributor Nathan Slaughter mulled the company's fiscal 2006 forecast. Investors who leap here are still making a leap of faith.

Alyce Lomax does not own shares of any of the companies mentioned.