1 Earnings Driver Apple Investors May Overlook
Investors that already know what iPhones, cigarettes and wedding rings have in common can probably safely skip over this article.
On the other hand, if that grouping of consumer products doesn't seem familiar, it might be useful to consider this question:
Hint: They all sell at least one product that can fit in the palm of your hand.
Bigger Hint: They each sell a whole bunch of them relative to one key metric.
Biggest Hint: They all have retail stores.
Spoiler: According to a recent Forbes article, they rank #1, #2 and #3 respectively for this key retail store metric -- sales per square foot.
Top 3 Sales Leaders
The numbers reported by Forbes were based upon eMarketer.com data, and are huge relative to other bricks and mortar stores:
- Apple Stores - $4,551 per square foot.
- Murphy USA - $4,221 per square foot.
- Tiffany & Co. - $3,043 per square foot.
The Next Three
- Michael Kors Holdings Ltd - $1,886 per square foot.
- Lululemon Athletica inc. - $1,841 per square foot.
- Coach Inc - $1,532 - per square foot.
Apple Store Growth Chart:
Apple Store Revenue Trend
New Apple product launches and seasonality both contribute to the skew in sales.
Do Apple Stores Really Matter?
The short answer is yes.
According to its company 10-K, Apple sells its products worldwide through its retail stores, online stores, and direct sales force and third-party cellular network carriers, wholesalers, retailers, and value-added resellers to the consumer and also sells third-party iPhone, iPad, Mac and iPod compatible products, including application software, and accessories, through its online and retail stores.
Apple's FY 2014 ended September 27, 2014. During Q4, Apple retail stores accounted for just over 12 percent of total revenues up 25 percent quarter over quarter and up 15 percent Y/Y.
The Apple Stores contribute a significantly to revenues, and are growing at a fast pace.
Who Else Might Care About Apple Stores?
A quick look back at the top six retailers based upon sales per square foot reveals that three of them are luxury goods retailers. In fact, although it might be a bit of a stretch, four of six if you live outside of a major metropolitan area where yoga pants might be considered a luxury.
Apple stores have become an essential and growing sales channel based upon revenues. Many investors may live in smaller markets and not experienced the "buzz" surrounding the opening of a new Apple store.
However, for other luxury retailers and the landlords who rent space to them, the proliferation of Apple stores could be viewed as a competitive threat both in the U.S. and globally, as 60 percent of Apples sales were international in 2014.
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