Apple CFO Anderson: Apple Retail Stores ‘creating significant growth’

“During a Goldman Sachs Technology Investment Symposium in Phoenix, chief financial officer Fred Anderson talked about the company’s financials, including about the retail stores. Much of the 26-minute talk repeated information that’s been previously released,” ifoAppleStore.com reports.

“Asked where the company would be ‘maxing out’ on the number of retail stores, Anderson repeated that the company has 76 stores today, would be opening the 77th ‘flagship’ stores in San Francisco this weekend, and would be opening the second international store in Osaka before the end of the year. He said the company is targeting ‘somewhere around 80 stores’ by back-to-school September,” ifoAppleStore.com reports.

“As for expansion beyond that, Anderson said the stores are already creating ‘significant’ growth for the company. He repeated that the company has developed a financial model based upon the sales experience of the existing stores. This model, based on regression analysis, can reliably predict the sales of a potential location in a Metropolitan Statistical Area (MSA), based on the known Macintosh user base within 10-15 miles of the location,” ifoAppleStore.com reports.

“‘We don’t plan to open any stores that we don’t believe we have a chance to break even within the first year of operation,’ Anderson said. Unlike other companies, he added, Apple does not intend to have 300 stores–only profitable stores, and the enhancement of the company’s brand and other Apple resellers,” ifoAppleStore.com reports.

Much, much more here.

19 Comments

  1. I wonder how Apple stores are impacting other resellers of Apple products and because of those loss in sales they are cutting back in their advertising budgets which in turn hurts or kills off magazines devoted to Apple products. These magazines which help spread the message of Apple to the general public.
    Apple never seems to advertise any where or support any publications or web sites promoting Apple.
    (Ever seen an Apple ad on this website????)

  2. The one: Of course, Fred Anderson isn’t leaving completely, but is moving to a non-executive role on Apple’s board where hopefully his successor – whose CV seems to imply that he is almost a protege of Fred Anderson – can continue to benefit from Anderson’s mentorship.

    —-

    On a more general level, the fact that Apple is only willing to open stores which have a realistic opportunity of achieving stand-alone financial viability in a twelve-month timeframe should say something to potential Macintosh entrepreneurs.

    I can only imagine that any given Apple Store is a highly expensive investment, requiring a viable store location – in terms of size and target demographic – plus (apparently) a viable pre-existing Macintosh audience in an 700 sq.mile area.

    This means that the “smart” Macintosh support entrepreneur would base themselves around 25 miles from an Apple store so that they can live off the crumbs from Apple’s table, because – let’s face it – once you’ve got your dual processor G5 with your 23″ screen set up, you’re going to be loath to de-rig it to take it to The Genius Bar.

    Also, you know that if Apple have opened a store in a given location, there’s a real opportunity to build a customer base especially if that store is in the middle of a crowded metropolitan area with no parking: Let Apple have the benefit of the initial sale to the customer, but try and grab the incremental support opportunity which is arguably a larger market given the loyalty of Macintosh users, the durability of Macintosh systems and the reliability of the Macintosh OS.

    Of course, there’ll be loads of independant resellers crying foul saying that they built the market and Apple is now taking away their livelihood.

    But the solution is for resellers to focus on another way of adding value: Apple Stores appear to be heavily focussed on the whole Digital Hub concept, so the market for the independant should be to go after Small Business markets like database development, point-of-sale, or high-end professional markets like audio/video production selling equipment which is outside of the Apple Store mainstream.

  3. I have to admit I am impressed. That margin, given that they are kicking back to apple a proper amount for wholesale, is very good. And this in a somewhat recessionary period. And half of the customers are new to macs, also good.

    Sort of confusing that market share is not increasing, given all that.

  4. How did “other resellers of Apple products” benefit when Apple was loosing market share? Unless their store is two doors down from an Apple store they will benefit from an increased number of Mac Customers.

  5. the reason apple market share is not increasing is all apple owners are also buying a windows pc or two…..
    ” width=”19″ height=”19″ alt=”wink” style=”border:0;” />

    (i�m guilty…added 4 windows pcs to the household to compliment/supplement the apples…lots of game players here-apple don�t cut it in that area.)

  6. >…lots of game players here-apple don�t cut it in that area.)

    I was reading in Wired that the X-Box2 is going to use parallel powerpc chips. Could it be that it will be easier to port the games to G5 than to PC? If so expect to see some game fans switch.

  7. I live near a “top 100” MSA, somewhere between 98 and 103 of US cities. A local Mac-based consulting firm was asked by Apple to raise its profile. They opened a retail space on a busy road in a strip mall. Nothing fancy, certainly nothing like the Apple Stores, but at least a presence. They say they will carry stock based on sales feedback.

  8. Buying a PC computer just to play games? What a waste! I got my kids a PS2 for that. It’s cheeper and plays games better that any computer can, it’s what it is designed for. We still buy games for the mac, the kind that work best on a computer.

  9. Steven Georges said;
    “Buying a PC computer just to play games? What a waste! I got my kids a PS2 for that.”

    That�s a laugh. Guess you don�t know real computer games or have a cable or DSL connection. Gaming ain�t just what�s on ones computer – it�s playing in huge LAN parties and gaming with the thousands of players around the world on games that are not available on the mac or ps2. Starting up a “clan” and palying against other internet players in different countries.
    And your comment that ps2 plays games better than an computer can? Ha! You are not in touch with the real computer gaming world. We have PS2 and GameCube – guess where my boys are playing games at…on their windows peecees. PS2 and GameCube are gathering dust…
    And Mac does not get the games soon enough to keep up with what is hot in the market.

  10. sittingoverhere,

    Why should Apple advertise heavily in a Mac magazine? Anyone with a subscription to said magazine is already aware of and probably going to buy the product it would advertise for. They advertise heavily in areas where they need exposure (for instance, PC Magazine and networking magazines). It would just be poor business practice to place ads that don’t do anything.

    -Joel

  11. Right on the money Joel…

    Advertising for macs in mac friendly areas is like “preaching to the choir”. Why throw good money around advertising to the people that are already dedicated fans and life-long users? Wouldn’t make much sense to me. I think Apple is playing their cards right in this area.

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