Record Revenues For Stores, Yet Still Disappointment

January 23, 2013

Despite tumultuous leadership for Apple’s retail stores and continued grumbling by a segment of store employees, Apple’s chain reported record revenues and the largest number of visitors for the first quarter of 2013, and the second-highest profit ever. But even with the retail segment’s stellar performance, and record performance for the rest of the company, investors expressed disappointment with the results by selling off Apple shares, sending its after-hours price down by over 10 percent. By any measure, the past quarter was a difficult one for Apple retail, with the chain’s Sr. VP John Browett leaving in mid-quarter. At the same time, there is on-going pressure to improve store operations against a tide of increased visitors, and pressure from some employees for improved pay and benefits. Overall, the company reported revenues of $54.5 billion, a new record fueled by record sales if iPhones and iPads. Total company profit was $13.1 billion, also a new record. On the retail side, retail revenue totaled $6.441 billion, compared to $6.112 billion in the same quarter of 2012, which was the previous record. The stores tallied $1.557 billion in profit. Average per-store revenue was $16.3 million, the second highest figure in the chain’s history, while the number of visitors was 121 million, a new record.

During a conference call with financial analysts, CFO Peter Oppenheimer said that 11 new stores opened during the quarter, and that another 14 stores had been relocated or expand because they had outgrown their original spaces. He noted there are 401 stores now open, with 150 outside the United States. He did not provide an update on new stores opening in fiscal 2013. However, during the financial call’s Q&A session, he did say retail capital expenditures will total “a little bit under $1 billion,” compared to $858 million last year.

While answering a question about China, Oppenheimer noted there are 11 stores now open in China. “We obviously have many more to open there,” he said, adding that authorized premium resellers increased from 200 to over 400 during the past year.

Lastly, Oppenheimer announced that the company had reorganized its presentation of financial results to be more transparent. The changes include breaking out individual product sales, and creating a separate sales segment for greater China (China, Hong Kong, Taiwan). The former change seems to end the past practice of reporting of how many Macs are sold by the retail stores. Now, the retail Mac sales appears to be included only in the line item sales figures.

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