Radio Shack 2009 Annual Report Download - page 32

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25
Sales in our service platform (includes prepaid wireless airtime, extended service plans, AT&T’s
ConnecTech service, and bill payment revenue) increased 17.4% in 2009. This increase was driven
primarily by increased sales of prepaid wireless airtime and extended service plans.
Kiosks Segment
Kiosk sales consist primarily of handset sales, postpaid and prepaid commission revenue and related
wireless accessory sales. Kiosk sales decreased 11.8% or $33.5 million in 2009. We realized a sales
increase in our Sam’s Club business, which was offset by a reduced number of kiosk locations. This
decrease in locations was partially due to the closure of underperforming Sprint-branded kiosk locations
in the first half of 2009 and the closure of the remainder of our Sprint-branded kiosks in the third quarter.
For more information regarding the reduction in kiosk outlets, see the Retail Locations table in Item 2 –
“Properties” in this Annual Report on Form 10-K.
In June 2009, Sam’s Club notified us of their intent to exercise their right to assume operation of certain
kiosk locations. This could result in the transfer of up to approximately 45 kiosks to Sam’s Club starting in
the first quarter of 2010. For more information regarding our arrangement with Sam’s Club, see the Kiosks
section in Item 1 – “Business” in this Annual Report on Form 10-K.
Other Sales
Other sales include sales to our independent dealers, outside sales through our service centers, sales
generated by our www.radioshack.com Web site and our Mexican subsidiary, sales to commercial
customers, and outside sales of our global sourcing operations and manufacturing. Other sales increased
$45.2 million or 13.7% in 2009. This sales increase was primarily attributable to the consolidation of our
Mexican subsidiary for all of 2009, but was partially offset by decreased sales to our independent dealers.
Our Mexican subsidiary represented less than 5% of consolidated net sales and operating revenues in
2009.
Gross Profit
Consolidated gross profit and gross margin are as follows:
Year Ended December 31,
(In millions) 2009 2008
2007
Gross profit $ 1,962.5 $ 1,922.7 $ 2,025.8
Gross profit increase (decrease) 2.1% (5.1%) (4.9%)
Gross margin 45.9% 45.5% 47.6%
Consolidated gross profit and gross margin for 2009 were $1,962.5 million and 45.9%, respectively,
compared with $1,922.7 million and 45.5% in 2008, resulting in a 2.1% increase in gross profit dollars and
a 40 basis point increase in our gross margin.
The improvement in gross margin was partially driven by improved product mix combined with fewer
markdowns as a result of more effective promotional productivity, inventory management and higher sell-
through of seasonal products.