“Apple Inc. Chief Executive Tim Cook disclosed on Wednesday the tech giant’s retail ambitions: Triple its store count over the next two years – not in his prepared remarks, but buried in the Q&A session,” Andria Cheng reports for MarketWatch. “He didn’t disclose the company’s specific expansion plan, and an Apple spokesman didn’t immediately respond to a request seeking additional comment. Apple, which didn’t give an update of its latest store count, had 420 stores, including 254 in the U.S. and 166 overseas, as of Dec. 28. The company has opened its first stores in Brazil and Turkey to expand its footprint to 15 countries.”
“Apple grew its retail sales to $20.2 billion last year, or 12% of the company’s total, from $14.1 billion in 2011. In the U.S., its share in the specialty electronics retail space also has surged to 15% from 10.8% to be the No. 2 player between 2011 and 2013, while Best Buy’s share has dropped to 31.3% from 32.7% during the same period, according to Euromonitor International data,” Cheng reports. “However, the headline of Apple’s retail expansion isn’t about the incremental pressure that it will put on Best Buy, but how Apple will get out from behind its own shadow.”
“The company’s retail sales in the quarter ended March 29 actually dipped slightly to $5.23 billion to 11% of Apple’s total sales, from 12% a year earlier. In fiscal year 2013, the retail segment’s operating profit dropped 13% to $4 billion as gross margin declined, according to the company’s annual filing in October,” Cheng reports. “‘Apple is still an iconic, exceptional brand,” said Customer Growth Partners President Craig Johnson in an interview. “It’s the biggest style-setting brand. But the stores aren’t providing the compelling range of newness that they did a year or two ago. The brand is a little dated. It’s not as novel anymore.’ Johnson, whose firm advises both retailers and institutional investors, said his 16-person field team’s Apple store checks in the U.S. and U.K. in more than 60 shopping venues found that Apple retail store sales had peaked, as comparable sales have declined ‘significantly’ for the first time.”
Cheng reports, “The company’s retail sales per selling square footage has declined to $4,410 in the first half of this fiscal year, from $4,650 in 2013 and $5,230 in 2012, Johnson said. ‘Any other retailer in the world would give their left arm’ for $4,000 sales per square foot, Johnson told MarketWatch. Still, ‘the stores aren’t as productive as they used to be. To keep expanding in the U.S., they may not always have the tier-1 locations. (But) internationally, the brand has a lot of legs. There’ll be appetite for physical Apple stores in Asia and all over the world. The question is at what pace do you expand?'”
Read more in the full article here.
MacDailyNews Take: With some actual leadership finally coming on board next week in the form of Angela Ahrendts, we expect Apple’s Retail segment, which has been rudderless and just coasting along for far too long, to pep up significantly as the vestiges of Browettization are wiped clean.
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