Radio Shack 2003 Annual Report Download - page 6

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RADIOSHACK 2003 Annual Report
4
In 2003, we did make significant moves to fulfill the “cost-effective solutions” element of our strategy. We exited certain
manufacturing operations which were not core to our strategy and were providing insufficient returns. We consolidated,
closed, or sold six different businesses, including our installation, signs, fixtures, and wire and cable units.The favorable
cost impact from these moves should be felt for most of 2004. In addition, we realized payroll savings of approximately $12
million from labor scheduling, simply through more meticulous focus on and accountability for productivity results.
Our supply chain management initiatives were perhaps
the most significant set of activities responsible for
delivering results and keeping us on strategy in 2003.
Supply chain management lowered costs and optimized inventory, primarily by securing better terms from vendors and
tying our organization’s focus and compensation to more appropriate merchandising metrics.
RadioShack clearly developed a more efficient supply chain in 2003. RadioShack now gets products into its stores more
efficiently and at lower prices than ever before.The company can react better to meet customer demand, too. RadioShack
has created a streamlined supply chain which is better serving our customers and shareholders alike.
Opportunities to Drive Shareholder Value
While it did help us to drive better earnings, our focus on process improvement during 2003 was not without missteps
and mistakes. During our highest volume time of year (fourth quarter), we did not have enough traffic-driving, low-priced
promotional offers. In addition, we did not buy aggressively enough on many hot, fast-moving products.
Now that we are sourcing product more effectively, we can maintain our margins in 2004 as we pick our spots to be more
competitive on price. We are now in a better position to select traffic-driving product that can be more promotional, and we
expect to drive accessory add-on opportunities, too. We also think we can further optimize the balance between sales,
earnings, and use of working capital by taking calculated risks to be deeper in more product categories and by changing
our advertising mix to more effectively reach our target audiences.
RadioShack
Sales Growth
(4%)
+2%
2002
2003
Packaging alkaline batteries within a novelty coin bank turned
a routine need into a cool, collectible gift item—and a hot holiday
sellout worth repeating.