Apple has one of the most valuable brands in the world, and the company’s retail stores are arguably the most successful method of promoting that brand. In fact, the company has designated 20 of its stores as “high-profile,” and has expensed certain brand awareness expenses for these locations to the corporate ledger, and not the Retail segment. But according to an Apple filing with the Securities and Exchange Commission (SEC) today, that accounting policy is ending without explanation. “Prior to 2012, the Company allocated to corporate expenses certain costs associated with its high-profile retail stores that have been designed and built to promote brand awareness and serve as vehicles for corporate sales and marketing activities,” Apple stated in its filing. It then explained, “Starting with fiscal 2012, the Company no longer allocates these costs to corporate expenses.” Further, Apple also said it retroactively reclassified $24 million in fourth quarter 2011 high-profile store expenses from corporate back to the Retail segment. The accounting change won’t substantially affect Retail segment financials. The company has expensed an average of $95 million a year over the past four years to corporate for high-profile stores—just 1.3 percent of the Retail segment’s latest quarterly profit, which totaled $1.8 billion. The accounting change wasn’t mentioned by Apple executives during yesterday’s quarterly conference call with analysts to announce Apple financial results.
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