This is a partial transcript from Your World with Neil Cavuto, December 24, 2001.

BRENDA BUTTNER, GUEST HOST: Sales are up at The Sharper Image. The retailer known for its gadgets and electronics is reporting increased traffic in its stores, and sales getting a boost from the company's many exclusive and popular products. But will it be enough to make a difference during this crucial season?

Joining me now is Richard Thalheimer. He is founder, chairman and CEO of The Sharper Image. Thank you so much for joining me, sir.

RICHARD THALHEIMER, CHAIRMAN & CEO, THE SHARPER IMAGE: Thank you for inviting me.

BUTTNER: So business is pretty good, huh?

THALHEIMER: It is. We're sort of the exception to the rule this year, I think. We are really pleased.

BUTTNER: I am kind of surprised because you tend to be high end. Are you making markdowns like the rest of the stores?

THALHEIMER: Well, surprisingly, we actually have improved margins this year by more than two percentage points, so that was really good. And we did invite incorporating a mix of lower price points, more useful products and, at the same time, really pushing our best selling ionic breeze silent air purifier.

BUTTNER: Now that is the big, hot item, huh?

THALHEIMER: It is. And it's a $350 item, so that's a good ticket.

BUTTNER: Yes, that's what I wanted to say. I mean, you're talking about good price points -- 350 bucks for a present.

THALHEIMER: Well, two thoughts. I mean, one is when you want clean air for yourself or your children, you don't mind spending what is a reasonable price for an air purification system. And the other thought is we had lots of great items at $15 and $30 and $40 this year.

BUTTNER: You did? Well, what are some more popular ones?

THALHEIMER: Well, you know, something as simple as a little key chain high-brightness flashlights that are the rage this year. Everybody wants to put those on their key chains because they do what big flashlights use to do; or our, you know, our stereos for just $50 to $100 are just terrific items.

BUTTNER: I want to ask you about your stock price because if it were a commodity, it would be one of the hottest sellers in your stores. You are up some 46 percent the last month?

THALHEIMER: Well, I think people that go to the mall see the number of people in our stores, and they see the bags leaving. And they realize we are one of the few retailers that is really getting more than our share of traffic right now.

BUTTNER: But your three-year average though, is not so much to brag about. You're down seven percent a year on average. How do you turn that around?

THALHEIMER: Well, you know, last year we had a record year of sales and earnings. With the Razor scooter popularity, you earned $1.33. And because this year could not equal last year's exceptional Razor, I think people traded the stock down. Now it has come back up because they realize that year is over and next year, we are expecting a big improvement.

BUTTNER: What is the Razor for next year?

THALHEIMER: Well, I think we have a tremendous surprise coming up in about a month, which I can't say today, and people will be very excited about it.

BUTTNER: Why not? Come on, break the news right here.

THALHEIMER: Come back in a month. Let's talk.

BUTTNER: So in the end, your lower-price items, though, are selling better than the more expensive ones?

THALHEIMER: Well, we have really made a huge effort the last three years to lower our price points so we can go into more malls. And that is why we added more stores this year than any year in the past 10 years.

BUTTNER: All right. Richard Thalheimer, of Sharper Image, we wish you continued success. Thanks so much for joining us.

THALHEIMER: Thank you.

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