Sharper Image has kicked up a lot of dust defending its air purifier.
You can make fun of its rotary nose-hair clippers and automatic eyeglass cleaners, but don’t mess with the Sharper Image’s $350 Ionic Breeze Quadra electrostatic air purifier. The retailer is suing three manufacturers for patent infringement, two others for making slurs and the estimable watchdogs at Consumers Union for publishing a pair of lousy reviews.
The purifier product line is the Sharper Image’s top earner, probably accounting for somewhere between a fifth and half of the company’s receipts. The chain is doing great: six straight quarters of growth, revenue up 26% last year to $674 million, earnings up 59% to $25 million. “We’re no longer just a gift shop,” says founder and Chief Executive Richard Thalheimer.
Only one problem: The Ionic Breeze, a 2-foot-tall slender electro-static room air cleaner, doesn’t work so well, according to the not-for-profit Consumers Union. It tested the appliance and 15 other purifiers for the February 2002 edition of Consumer Reports and placed the Breeze dead last, saying it “proved unimpressive” and “removed very few air particles.”
Instead of ignoring the review and moving on, Sharper Image went on the offensive, challenging the methods of the Consumers Union testing engineers. One important criterion was how quickly the machine cleaned a room. “It’s like the car salesman telling you the Corvette is best because it’s fast,” says Thalheimer. The Ionic Breeze works slowly, uses less power than its rivals and is meant to be left on all the time.
Consumer Reports revisited the category in its October 2003 issue, acknowledging the Sharper Image’s complaints in a sidebar, and let the machine run for an additional 17 hours. The Breeze crept up a notch. It came in second to last.
The Sharper Image sued Consumers Union immediately in the federal district court in San Francisco, claiming it maliciously fudged the results and that it had gone so far as to change a graphic to make the data look worse for the Breeze. The suit alleges Consumers Union was motivated by “disappointment and shock” that the product was still selling well.
Thalheimer, a natural-born merchandiser whose grandfather founded the Blass department store chain in Arkansas, acknowledges the suit is a p.r. risk. “Maybe it’s a long shot, but I think in the past two years we’ve seen a lot of institutions exposed as less than totally straightforward, from the Catholic Church to the New York Stock Exchange,” Thalheimer says. A hearing is scheduled for mid-June. Steven Williams, a lawyer for Consumers Union, says of his opponent, “It’s a very strange, very litigious company.”
Consumers Union has been sued 15 times in its 86-year history. It lost only once, over a misstatement in a tepid 1970 review of a pair of Bose speakers. But that verdict was reversed 14 years later on free-speech grounds by the U.S. Supreme Court. A high-profile case brought by Suzuki Motors is still pending.
While he’s at it, maybe Thalheimer should take after the short-sellers who are all over his company. The short position of 3 million shares comes to 23% of the public float in the stock. The bears take the retailer to task for last year’s increase in inventories, at 47% much brisker than the sales increase. (The company says the discrepancy is due to the need to stock the 50 stores added since 2002.) Nearly all of the company’s $79 million noncatalog marketing budget last year went to support the line of purifiers; half the money was used for infomercials hosted by Thalheimer himself.
Electrostatic room air cleaners charge airborne particles of dust, dander and pollen with negative ions. As the air circulates through the machine, those particles latch on to positively charged metal plates. Unlike most other air purifiers, Sharper Image’s moves air without a fan, by using electrostatic transduction. Brookstone and Honeywell International have each recently introduced their own electrostatic air purifiers, both cheaper than the Ionic Breeze. Sharper Image is suing both, as well as another manufacturer, alleging patent infringement.
Sharper Image is also suing IQAir of Switzerland for referencingthe Consumers Union report in a pamphlet. IQAir has retaliated by testing the amount of ozone produced by electrostatic cleaners. (Ozone can be harmful to asthmatics.) IQAir’s tests showed that pollution from some models, including the Ionic Breeze Quadra, exceeds safety standards. Sharper Image says its machines are proven safe.