Exhibit 10.23

The CIT Group/
Business Credit, Inc.
3rd Floor
300 South Grand Avenue
Los Angeles, CA 90071
Tel: 213-613-2575
Fax: 213-613-2588

     [LOGO]
                                 March 24, 1997

Sharper Image Corporation
650 Davis Street
San Francisco, CA 94111

Gentlemen:

Reference is made to the  Financing  Agreement  between us dated  September  21,
1994,  as amended (the  "Financing  Agreement").  Capitalized  terms used herein
shall have the same  meanings as specified  in the  Financing  Agreement  unless
otherwise specifically defined herein.

You have advised us that for the period ended January 31, 1997,  you were not in
compliance  with the Working  Capital  Covenant as set forth in  paragraph 10 of
Section 6 of the Financing  Agreement and the Fixed Charge Coverage Ratio as set
forth in paragraph 11 of Section 6 of the Financing Agreement. We hereby confirm
that  solely  for the  period  ended  January  31,  1997,  we shall not deem the
foregoing  to be a breach  of,  or  violation  under  the  Agreement,  provided,
however, henceforth you must be in strict compliance with such covenants.

In addition,  pursuant to mutual  understanding and effective  immediately,  the
Financing Agreement shall be, and hereby is, amended as follows.

(1) Section 1 of the  Financing  Agreement  shall be, and hereby is,  amended by
amending the definitions of EBITDA,  Working  Capital,  Net Worth,  and Leverage
Ratio in their entirety to read as follows:


A company of
Dai-Ichi Kangyo Bank and
Chase Manhattan Corporation



<PAGE>


"EBITDA shall mean,  in any period,  the net income (or net loss) of the Company
and its  Subsidiaries,  on a  consolidated  basis plus all  amounts  deducted in
determining  net income in respect of Interest  Expense,  income tax obligations
(paid or accrued),  depreciation expense and amortization expense plus,  without
duplication,  the Spa  Writeoff  before the  related  income tax  benefit,  each
determined in accordance with GAAP consistently applied."

"Working  Capital  shall mean (a) the sum of (i)  Current  Assets  plus (ii) the
amount paid to  Internationale  Nederlanden  with respect to the  repurchase  of
their  warrant not to exceed an amount  satisfactory  to CITBC in the  aggregate
minus (b) the difference of (i) Current  Liabilities  minus (ii) the Spa Reserve
less amounts  written-off  against the Spa Reserve for long term assets relating
to the Spa Division."

"Net Worth shall mean (a) the sum of (i) Total  Assets plus (ii) the amount paid
to  Internationale  Nederlanden  with respect to the repurchase of their warrant
not to exceed an amount  satisfactory  to CITBC in the aggregate  plus (iii) the
Spa Writeoff minus (b) Total Liabilities,  and shall be determined in accordance
with GAAP,  on a  consistent  basis with the latest  audited  statements  of the
Company."

"Leverage  Ratio  shall  mean  the  ratio   determined  by  dividing  (i)  Total
Liabilities minus the amount of the Spa Reserve, by (ii) Net Worth."

(2)  Section  I of the  Financing  Agreement  shall be  further  amended  by the
addition  thereto  of the  following  definitions  of  "Spa  Reserve"  and  "Spa
Writeoff":

"Spa Reserve  shall mean the amount of Current  Liabilities  recorded at January
31, 1997, by the Company pursuant to GAAP with respect to the  discontinuance of
its Spa  Division,  provided  such  amount  shall not exceed  $8,000,000  in the
aggregate."

"Spa Writeoff  shall mean all amounts  deducted in  determining  net income with
respect to charges  taken  during the Fiscal  Quarter  ended  January  31,  1997
related to the Company's  discontinuance of its Spa Division,  provided such net
amount shall not exceed $5,000,000 in the aggregate."

Except  as  specifically  set forth  above,  no other  amendment,  modification,
waiver,  or change in any of the terms or provisions of the Financing  Agreement
is hereby intended or implied. This letter shall also not constitute a waiver by
us of any other existing defaults under the Financing Agreement,  whether or not
we have  knowledge  of same,  and  shall  not  constitute  a waiver of any other
default whatsoever.



<PAGE>


If the  foregoing  is in  accordance  with your  understanding,  please sign and
return to us the enclosed copy of this letter to so indicate.

                                   Very truly yours,

                                   THE CIT GROUP/BUSINESS
                                   CREDIT, INC.

                                   By: /s/ Bonnie Schain
                                       -----------------------------------------
                                   Title: Assistant Vice President

Read and Agreed to:

SHARPER IMAGE CORPORATION

By: /s/ Tracy Y. Wan
    -------------------------------------
Title: Sr. V.P., C.F.O.

By: /s/ Vince Barriero
    -------------------------------------
Title: Sr. V.P. CIO