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Apple retail profit declines by 30%

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.




by MacNN Staff

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Comments

  1. Deal

    Joined: Dec 1969

    0

    Maybe...

    All those profits went into R&D :)

  1. Albert

    Joined: Dec 1969

    0

    Bad in the good

    somebody can always find the bad, even if apple shows the second best ever numbers...

  1. Sondjata

    Joined: Dec 1969

    0

    Store Problems

    I think Apple is going to have more store problems in the future. For example, they just opened up an Apple Store in the Paramus Mall, this competes directly with their Tices corner store. I for one won't be making the trip to Tices Corner and suspect a good number of people that used to make that trip will make the same decision.You simply cannot put stores within' spitting distance of each other like that. Especialy specialty stores (and Apple is a specialty store). The only way my observation is off mark is if, with the Intel Macs, the customer base of Apple Computers grows at a decent clip. I want to be wrong.

  1. bobolicious

    Joined: Dec 1969

    0

    Everyone I know...

    ...is now interested in Macs... My sense is if VPC or BootCamp offers XP virtualization and macs are price competitive, market share growth will exceed expectations dramatically...

    The iMac is the most ergonomically superb computer I have aver experienced...

  1. rtamesis

    Joined: Dec 1969

    0

    Intel macs

    A lot of people are also waiting for other Intel Macs to be released before buying a Mac.

  1. vasic

    Joined: Dec 1969

    0

    Keep them coming!

    It is clear that the stores are extremely popular. Apple is opening new ones after carefully researching data from the existing ones and analysing demographics in the area. Your Paramus store (see 'sondjata' post above) will most likely affect the traffic to the Tice's Corner one, however I'm sure Apple calculated that and figured it won't kill its business. According to their stats, they get about 1,500 people to walk through each and every store every day. That's a lot of faces. I have to say, I personally can't wait for the new Manhattan store to open in front of 'The Plaza' hotel; it's about time that 'the City that Never Sleeps' gets a 24/7 Apple store.

  1. Timothy Flint

    Joined: Dec 1969

    0

    Apple store issues

    The people who run Apple's retail division came from clothing store companies. You don't have to teach people to wear clothes. You don't have warranty issues with clothes. You don't have to have any technical know how to sell or repair clothes. Until Apple understands that their store employees must be more than low pay clothing salespeople, Apple stores will have trouble.

  1. Fast iBook

    Joined: Dec 1969

    0

    Well remember.

    There are those who go to apple store to check out the hardware, and then order over the internet or by phone too. I think apple should focus on letting the online store and retail store locations mirror or compliment each other, that way you can get cusom specs on a unit in-store, instead of them being out of stock and so on. Another thing is educational discounts. If all you needed was a school ID to get student discounts i think a lot more people would use the retail venue as their point of purchase. They still have plenty of options for their retail area.

  1. ktwdallas

    Joined: Dec 1969

    0

    school discount

    Actually, that's all you need. I bought an iBook at a retail store a couple of years ago with the education discount and all I had to show was my college ID.

  1. ktwdallas

    Joined: Dec 1969

    0

    school discount redux

    I meant I purchased specifically at the Apple store in the local mall, not just any retail outlet. (Although I do wish that Fry's and CompUSA, who also sell Mac stuff, would honor Apple's educational discount as well.)

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