updated 10:50 am EDT, Thu April 20, 2006
Apple retail profit down
Despite the second best quarter ever, Apple's retail segment suffered its first setback--earning less profit than it did in the year ago quarter Though it posted increased year-over-year revenues of $636 million, profit dropped by more than 30 percent; the company, however, said it would continue its expansion with plans to open 40 new stores during its fiscal 2006 year (which ends in September)--a little more than 30 of which are expected to be in the US. Apple said that its retail segment earned a profit of $29 million, down from $42 million in the year ago quarter, reflecting a sales pause due to the company's transition to Intel-based Macs. Apple, which opened six new stores during the quarter to end with 141 total retail outlets, said that traffic to its stores increased during the March quarter from 13 million to 18.1 million visitors, which translates to about 10,000 visitors per store per week.
Apple also noted that percentage of new-to-Mac users increased to 50 percent of new Macs sold, representing strong marketshare expansion potential. Despite the significant drop in segment operating profit, the company's retail stores sold seven percent more Macs and earned 11 percent more revenue during the March quarter compared with the same quarter last year.
While the segment's profit declined from the prior year, Apple may have benefited from its retail segment more than the numbers show. The company said its associated manufacturing profit from the retail segement actually increased by 25 percent from $102 million to $128 million, indicating that the direct-to-consumer supply chain is helping Apple with inventory, forecasting, supply chain, and other streamlined efficiencies.
Apple also noted high interest in its free personalized training offered at the Apple Stores. The Studio offers one-on-one training for Mac users on a wide variety of topics. The company said that it offered more than 50,000 personal training sessions during the quarter.