Retail Commitment Tops $1.4 Billion

May 6, 2006

Apple released its formal second-quarter 2006 financial statement, and it noted two reasons for the decline in average store revenues over the same quarter of 2005: “The continued expansion of iPod points of distribution and a delay in purchases of Macintosh computers due tot he Intel transition.” Oddly, Apple had a similar answer for why retail store sales increased for the first six months of fiscal 2006. The rise was attributed primarily to, “strong sales of iPods, other music related products and services, and Macintosh products during the first quarter of 2006, partially offset by the slowdown in Macintosh sales during the second quarter of 2006.” The report also filled out several other financial figures for the quarter.

The report said that Retail segment capital expenditures now total $611 million, including $42 million for the second quarter, which is in line with previous quarters. Total expenditures for the first six months totaled $80 million, and Apple forecast it would spend another $130 million on the stores in the second half of the year, a healthy increase.

The number of retail employees was up 112 in the quarter, to 4,851. Marketing costs for the chain’s high-profile stores totaled $15.2 million, which is the middle of the range for past years.

Apple locates stores only in very high-traffic locations, and pays for the priviledge. Lease commitments were up by $77 million during the quarter, and now total $782 million for all locations.

Adding up all the figures, Apple’s total investment in the Retail segment operation is nearly $1.4 billion for the store facilities, and another $70 million in marketing costs.

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