SAN FRANCISCO — Matthew Kelley is a subscriber and fan of Consumer Reports magazine. But he also loves his Ionic Breeze room air cleaner from Sharper Image Corp.
So when Consumer Reports' October issue termed the Ionic Breeze "ineffective" in cleaning the air, the Georgetown, Colo., accountant was torn. In the end, he sided with Sharper Image. In a letter to the magazine, he called the $300 product "a terrific purchase."
"I rarely respond to things like this" in writing, Kelley, 33, said later. "But it's made a difference in our home."
Kelley's loyalty is welcome news for Richard Thalheimer, Sharper Image's founder, chairman and chief executive. But Thalheimer is still livid over Consumer Reports' assessment and has taken matters into his own hands. The retailer sued the magazine this month on grounds that its findings were false, misleading and harmful to the air cleaner's sales and reputation.
"They pretend they've addressed our concerns, but they really haven't, and we're ticked," Thalheimer said.
Consumer Reports said it stood by its story as "truthful, fair and accurate."
Companies seldom sue Consumer Reports, but Thalheimer took the aggressive step to help protect the brisk sales momentum enjoyed not only by the Ionic Breeze air cleaners but by Sharper Image overall.
Once a peddler of expensive and largely unnecessary gadgets to upper-income men, Sharper Image now sells a broader, more useful product line to men and women -- and the company is on a roll. Sales and earnings are up smartly, and the company's stronger stock price and debt-free balance sheet are enabling Sharper Image to step up its store expansion.
Rising sales from the company's catalog and Internet operations, which together account for about 40% of Sharper Image's business, also are fueling growth. It's all backed by nearly $100 million in annual advertising that includes lots of TV infomercials.
"This is not the boy-toy company of 20 years ago," said Thalheimer (pronounced TALL-heimer). "Today our bestsellers are an air filter, an eyeglass cleaner and a nose-hair trimmer."
The company's sales per square foot are running above $625 annually, "at the high end" of specialty retailers in general, said Kristine Koerber, an analyst with WR Hambrecht & Co., which has had an investment banking relationship with Sharper Image.
