Apple Retail Revenues Up

April 25, 2007

Apple’s retail store operation posted increased revenues for the second fiscal quarter of 2007, but the results broke a three-quarter run of sequential revenue increases. Retail revenues totaled $855 million, up from $636 million in the same quarter of 2006, but down from $1.1 billion in the previous quarter, which included the holiday buying season. The retail segment reported profit of $32 million, with another $174 million in so-called “manufacturing” profit. Macintosh shipments at the stores totaled 275,000, up 78 percent from the same quarter of 2006, but down from 308,000 in the previous quarter. The stores hosted over 21.5 million visitors, CFO Peter Oppenheimer said.

Overall, Apple Inc. posted improved quarterly financial results compared to the previous year, collecting $5.26 billion in revenue ($4.36b Q2 2006) and earning $770 million in profits ($410m Q2 2006). Macintosh unit shipments during the second fiscal quarter totaled 1,517,000, up 36 percent compared to the same quarter of 2006, while iPod unit sales totaled 10,549,000, up 24 percent. Oppenheimer said the company expects revenue of $5.1 billion for the third quarter of this year. For more results, see the charts and graphs.

Oppenheimer said the company continues to invest in the retail chain, but unlike in previous conference calls, did not say how many stores would be opening during the rest of fiscal 2007.

He said that “over 50 percent” of retail store Mac buyers were new-to-Mac, the same figure given at the previous quarterly conference call, and by Steve Jobs during the Macworld Expo last January.

In response to a question about the iPhone, Oppenheimer said it was rather unique: the company’s secrecy usually keeps the retail store employees from knowing about products before they’re released, and consequently they can’t receive training on them. However, on the pre-announced iPhone, the retail group, “is putting a lot of energy into planning for the iPhone,” he said. When asked if Apple would be fully staffed to provide customer support for the iPhone, he said, “We have award-winning support, and are going at the iPhone with the same vigor.”

Oppenheimer reiterated that Apple will have 200 Best Buy stores selling products by the fall. He said Apple will be, “doing some unique merchandising things with them that we’re excited about,” but didn’t provide any details.

Oppenheimer reiterated that Apple will open stores in Glasgow (Scotland) and Sydney (Australia) “later this calendar year.”

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