Cut Costs of Boost Sales?

Which is more effective to my long-term profitability: cutting costs or boosting sales? Radio Shack is trying to do a little of both. They are cutting costs by “closing 505 stores…….paring inventory and capital spending…..and laying of roughly 1,750 employees”. Boosting sales may be a more effective approach to increasing profit. “Earnings gains that stem from cost cutting…usually are less valuable than those from rising revenue, because sales gains are considered more sustainable”. In Radio Shack’s case, this means selling more electronic accessories and cables, which are offer more profit. In fact, some consumers feel that the smaller Radio Shack stores are more accessible than their “big-box” competitors, like Best Buy. They’re more likely to run into a Radio Shack to buy these smaller items.
The Lesson: I’ve seen countless companies that cut expenses to the point that they harm sales (drop advertising and marketing campaigns, fire salespeople, etc). This is most common when business is slow: Let’s see what we can cut out of the budget. A better question may be: How can we increase sales? What opportunities can we find to increase profit?
Your Homework: What costs have you cut in the last 12 months that you regret? Have you invested again in that resource? Has the investment been successful?
(Source: “Will Radio Shack Lead Investors To a Letdown, WSJ 4/25/07)