Radio Shack 2008 Annual Report Download - page 4

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In my letter to you last year I concluded by saying…“2008 currently looks as
though it will be a challenging environment in which to operate. Nonetheless,
our course is clear. We plan to continue to improve the quality of our operations,
the stature of our brand, and the skills of our people throughout this next year.
We believe that, as economic conditions allow, this will result in the creation of
shareholder value at your company.”
As it turned out, as we all know only too well, 2008 did prove to be a challenging
year for us as well as the overall economy. Our earnings dropped from $236.8
million last year to $192.4 million for the full year of 2008, primarily due to a
slowdown in consumer spending during the holiday selling season.
Although disappointing, there were clear signs that the progress we had achieved
on our initiatives throughout the year were gaining traction operationally. I feel
comfortable in saying that, but for the major economic dislocation in the fourth
quarter, we were on a trajectory to financially outperform the previous year.
Yet, of course, the storm clouds were gathering.
The fourth quarter of 2008 was a very difficult trading period for us and for
most of the rest of U.S. retail. Our store operations group responded well to the
challenge—continuing to provide increased levels of service yet controlling costs in
line with diminished revenue levels. This was primarily the result of the progress
we had made toward establishing a more disciplined approach to store execution
throughout the year.
Our merchandising organization in its turn, responded to the challenges of the
fourth quarter by rigorously controlling inventory levels and freshness—ensuring
that the company was able to continue to strengthen its balance sheet during
a period of general economic and specific industry turmoil. We reduced our
inventory level from the previous year while improving our in-stock position.
Dear Shareholders:
0
$0.5
$1.0
$1.5
$2.0
2006 2007 2008
Diluted Earnings Per Share
0
$1,000
$2,000
$3,000
$4,000
$5,000
2006 2007 2008
Net Sales &
Operating Revenues
($ in millions)