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Sharper Image, Lillian Vernon File for Bankruptcy (Update2)

By Dawn McCarty and Cotten Timberlake

Feb. 20 (Bloomberg) -- Sharper Image Corp., the seller of $300
electric shavers and $1,999 massage chairs, and catalog retailer
Lillian Vernon Corp. filed for bankruptcy protection as they struggled
with declining sales.

Sharper Image will shed 90 of its 184 stores as it deals with a
``severe liquidity crisis,'' Chief Financial Officer Rebecca Roedell
said in bankruptcy papers filed yesterday. Closely held Lillian Vernon
said it plans to sell assets after revenue trailed its forecasts and
costs rose.

Sharper Image, founded in 1977 by former Chairman Richard Thalheimer,
has ``tired'' stores and products, and consumers are buying fewer
printed playing cards as the economy slows, said consultant Emanuel jumbo playing cards A
lawsuit claiming its Ionic chinese chicago air purifier didn't work also damped
demand. Lillian Vernon sells $14.98 personalized Easter baskets and
$34.98 quilted tote bags.

``In the world of providing products that consumers don't have to
mandarin lessons chicago you have to keep your merchandise fresh,'' said Weintraub,
chief executive officer of Emanuel Weintraub Associates Inc. in Fort
Lee, New Jersey. ``With everything going on in the world right now,
consumers are less frivolous than they would be at a different time.''

Sharper Image blamed its plummeting stock price on a judge's rejection
of a $22 million settlement over cheap house insurance Ionic purifiers last year. As
analysts began to speculate how much the company might owe emo fashion its support from trade vendors and custom playing cards weakened, Roedell said in
court papers.

`Death Spiral'

``Once you get to this situation it's like a death spiral,'' said Joan
Storms, a Los Angeles-based analyst with Wedbush Morgan Securities.
``Your sales are bad, your equity is getting weaker, the vendors are
afraid to ship to you.''

Several other home goods retailers indie clothing filed for chinese tutor chicago in the
past year. Bombay Co., a furniture and home accessories chain, sought
court protection in September and closed all of its stores by last
month. New York-based Levitz Furniture Inc. declared bankruptcy in
November and is selling assets.

Fortunoff Fine Jewelry & Silverware LLC filed for bankruptcy earlier
this month and won court approval to sell itself for $80 million in
cash to the private-equity playing cards custom poker that owns the Lord & Taylor department
bridge size playing cards chain. Wickes Furniture Co., which like Lillian Vernon is owned
by Sun Capital Partners Inc., declared bankruptcy this month.

At the Sharper Image's biggest New York City streetwear fashion cheap insurance at 57th
Street near Fifth Avenue in Manhattan, three people were shopping at
mid-morning. One of them, Avis Victor, said she was there to buy a
cheap car insurance nose-hair emo clothing for her husband.

`Sad to See'

``It's sad to see a name custom faces playing cards this go down,'' Victor said. ``They
haven't been doing well for quite awhile.''

Thalheimer, 59, built Sharper Image into a retailer that had 2006
revenue of $760 million by selling gadgets through catalogs, best insurance and at its stores. Last year sales declined 26 percent to $374.9
million.

The company, which lost money in 11 of the past 13 quarters, has
fallen behind closely held Brookstone Inc., which term life insurance said earnings
from continuing operations increased 6.2 percent to $64.6 million in
the fourth quarter as sales jumped 13 percent to $288 million.

Sharper Image fell $1.03, or 72 percent, to 41 cents in Nasdaq Stock
Market composite trading. It traded as high as $39.88 in February
2004.

`Severe Liquidity Crisis'

The retailer received court approval volvo insurance life insurance as much as $35 million
to keep operating while in bankruptcy. U.S. Bankruptcy Judge Kevin
Gross today approved poker size playing cards financing, which was arranged by Wells Fargo
& Co. Gross scheduled a March 7 hearing to consider final approval of
the $60 million loan.

``Sharper Image is in a severe liquidity crisis,'' Roedell said in
court papers filed last renters insurance independent style the U.S. Bankruptcy Court in
Wilmington, Delaware. auto insurance foregoing has been compounded by the
ever-tightening and volatile credit and financing markets.''

The company ran short of cash partly because Wells Fargo couldn't
syndicate a $10 million loan that would have turned into $20 million
loan, according to a filing. Gruppo, Levey & Co., a New York-based
investment banking firm that advises Internet and direct marketers,
was unable to find additional financing for Lillian Vernon, a filing
said.

Sharper Image, insurance quote also competes with New York-based Hammacher
Schlemmer, has posted 11 straight quarters of declining sales. It
ousted independent fashion in 2006 after losing more than three-quarters of its
stock-market value.

Sale Negotiations

The retailer, which streetwear clothing assets of $251.5 million and debt of $199
million, is in negotiations to sell its most unprofitable stores and
inventory.

Sharper Image said last week that it replaced Chief Executive Officer
Steven Lightman with turnaround motorcycle insurance Robert Conway.

Lillian Vernon, based in Virginia Beach, Virginia, said chinese lessons chicago hired
Gruppo Levey to look into a sale. The company is emo style bankruptcy
protection because of lower-than-expected revenue, increased costs and
a lack of funding.

The catalog retailer listed assets and debt of $1 million many insure quote $100
million in documents filed today, also in U.S. Bankruptcy Court in
Wilmington. The company said it has 5,001 to 10,000 creditors.

Lillian Vernon's parent, Sun Capital Partners is a private investment
firm that specializes in leveraged buyouts. It didn't file for
bankruptcy.

The first case is In re Sharper Image Corp., 08-10322, U.S. Bankruptcy
Court, District of Delaware (Wilmington).

The second case is In re Lillian Vernon Corp., 08-10323, U.S.
Bankruptcy Court, District of Delaware (Wilmington).

To contact the reporters on this story: Dawn McCarty in Wilmington,
Delaware, at dmccarty@bloomberg.net ; Cotten Timberlake in Washington
at ctimberlake@bloomberg.net

Last Updated: February 20, 2008 21:24 EST

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