When I last reported on Apple's financials, and how some fundamentals were slipping even as overall results were strong, I mentioned a report by BusinessWeek's Arik Hesseldahl that the company's retail store sales were $1.47 billion over 252 locations. Looking back at the number and then at Apple's FY2008 10-K filing, I suspect that was for a quarter, not a year. So I went back to the last annual report.
According to Apple, its retail store sales globally were about $6.32 billion in FY2008 with an "average of 211 stores" open in 2008. This could be misleading. The practice in retail is to measure results by same store sales, because it is the only way to determine -- apologies for the pun -- apples-to-apples comparison. However, this is what we've got. That gives an average revenue of $29.9 million per location.
However, as you can see from the Manhattan store sales, the mean and the median probably aren't right on top of each other. The New York Post reported respective sales at the GM Building and Prince and Greene locations of $440 million and $100 million, for a total of $540 million. In other words, at least one location is doing 15 times the average store sales volume.
Doing a bit more juggling, take the $540 million total from the $6.32 billion, leaving $5.78 billion, with the remaining number of stores at 209. Suddenly, average store sales look more like $27.7 million. Not shabby by any means, but consider that there may be a few other out-performers in the group. Ignoring the outliers gives a truer sense of how they locations do on the average. Would the real number be closer to $25 million? Less?
Time for some perspective. Apple is in a curious retail niche, because all the products are a) consumer electronics, and b) virtually all Apple, all the time. Finding an equivalent for comparison is difficult. For example, I checked the 10-Ks of Verizon, T-Mobile, and Sprint Nextel, as three enterprises with retail stores that focused on company brands, but couldn't get retail sales breakouts.
So I checked Best Buy's last annual report. What I found was surprising in comparison.
At the end of its FY2009, the company had 1,023 stores and average per-store annual revenues of $34.2 million. Clearly that's a lot higher than Apple, but consider that Best Buy has far more brands and categories and, as important, generally a lot more retail space per location -- about 39,000 sq. ft. That compares with about 6,000 sq. ft. for Apple's stores. In other words, the average Best Buy has annual sales per square foot of about $876. For Apple stores, even using the lower $27.7 million figure I calculated above, that would be a staggering $4,616 annual sales per square foot. Now let's make some outrageous assumptions â€" that there are enough high-flying Apple locations that the average per-store annual sales are only $20 million. That would still be well over $3,000 a square foot.
Jeez. No wonder they keep the stores around. I'm sure it leaves most any retail executive uncontrollably salivating.
Now for one more comparison. I looked up the FY2008 annual report of the Neiman Marcus Group, which operates the luxury department stores. Here's the picture, in short:
- 40 There are 40 Neiman Marcus-branded stores.
- Those stores represented 71.2 percent of the company's $4.6 billion annual revenue, or about $3.28 billion.
- The 40 stores have an aggregate area of 5,442,000 square feet.
The standard explanation is the high price of Apple equipment, but, please, let's get real. Jewelry is pricy merchandise, and in 2005, average sales per square foot for non-anchor tenants was $366. I'm willing to bet that they haven't grown ten-fold since then. Walk into an Apple store and you immediately see that the company handles merchandising and sales differently than other retailers. Products are presented, not shelved, and there is an abundance of help. Perhaps some of the other comsumer electronics retailers might learn a thing or two.
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