Radio Shack 2003 Annual Report Download - page 8

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RADIOSHACK 2003 Annual Report
6
By selling new products early in their technology product life cycles, RadioShack intends, as it has done in its past, to
“make markets”by accelerating adoption rates for distinct and innovative consumer electronics products and services. In
return for accelerating the adoption rate of new technology through multiple distribution channels, we intend to secure
licensing opportunities, exclusivity, residuals, or other forms of benefit which support our strategy and drive financial results.
Receiving these benefits in exchange for accelerating adoption rates should allow RadioShack to greatly minimize its capital
investment in new product ideas.
We believe technology innovation is a promising
and necessary component for RadioShack’s
long-term growth.
If a product or service is new and innovative, it stands to reason that it needs explaining. Customers won’t know what it is and that
plays into RadioShack’s strength of providing answers.Aligning ourselves with the world’s best developers of high tech consumer
products allows us to distinguish ourselves in the marketplace and positions us to have a sustainable competitive advantage.
The Outlook
By staying true to our strategy again in 2004, RadioShack anticipates driving further value for you, our shareholders. We
expect 2004 EPS growth to be 13% to 15%.This growth is based on:
>Sales growth of 3% to 4%;
>Gross margin improvement of 50 to 70 basis points;
>SG&A expense growth of 1 1⁄2% to 2 1⁄2%; and
>Share buybacks of $200 million to $250 million.
Wireless communications department sales are expected to grow about 5% to 8%.This implies a modest growth rate
of about 1% for the other 65% of the business.Within that roughly two-thirds of the business, we expect to sell products
of higher profitability faster than low-profit products, thereby improving our merchandise mix.
Gross margin improvement is again expected to also be driven by supply chain initiatives. In 2003, we delivered approxi-
mately $40 million in operating profit from supply chain initiatives.This year we intend to deliver at least $25 million from
continued end-of-life product management, information technology drivers, and several other activities.
2002 2003
48.9% 49.8%
RadioShack
Gross Margin
Rate
Value priced for family use, Hewlett-Packard’s all-in-one color printer,
flatbed scanner and copier replaces three old units and makes home
projects fun and easy.