Group Buys 5.4% Sharper Image Stake

A second group of Sharper Image Corp. investors said Friday that it might nominate new directors to help turn the gadget retailer around.

The investors, including Scott Galloway of Firebrand Partners and Daniel Nir of Gracie Capital, acquired a 5.4% stake in the company and have opened discussions with management about improving the company’s operations, according to a filing with the Securities and Exchange Commission.

Sharper Image shares lost almost half their value in 2005 as sales and profit plummeted. The San Francisco-based company said Thursday that March sales at stores open at least a year declined 29% and that it was introducing new products and cutting costs.

The Firebrand group said in the filing that “current business strategy employed by management ... continues to result in a deterioration of shareholder value.”

Last month, Sharper Image investor Knightspoint Group said it wanted to seize control of the board and oust the company’s founder and chairman, Richard Thalheimer. Those investors include former Merrill Lynch & Co. mergers chief Michael Koeneke and former Credit Suisse First Boston banker David Meyer.

Sharper Image shares rose 33 cents, or 2.6%, to $13.02. The stock has traded in a range of $8.75 to $17.30 in the last year.