Ominous Drop in Sales Bodes Ill for More than Just Apple - Barron's 25 comments
-
Font Size:
-
Print
- TweetThis
Apple's rotting retail sales will taint the electronics food chain, Barron's Plugged In author Mark Veverka says.
While foot traffic at Apple's (AAPL) 250-odd retail stores more or less held up (-1.8% from last year), customers aren't walking away with all that much - as same-store revenue fell 17.4% in the December quarter vs. a year ago. "Shoppers were not in a spending mood," Needham hardware analyst Charlie Wolf says, noting Apple's pricer lineup of iMacs and iPhones may not be a panacea for the cash-strapped shopper.
More than just bad news for Apple, Veverka says the severe drop in December sales "are a harbinger of depressing news for the entire electronics food chain":
Manufacturers, component suppliers, chip makers and semi-cap equipment makers all have to ratchet back their operations to reflect the lack of consumer demand. Yet it is an even more sobering development for mall owners, who have come to count on Apple stores as their new rock-star anchors - outperforming nearly every other retailer in their centers.
Still, Wolf notes that the typical Apple store produced sales of $4,700/square foot - undoubtedly the highest among retail chains in the country. The impact of its stores will remain powerful once some semblance of normalcy returns to the economy, and will continue to produce robust revenue for Apple - as long as it continues to deliver iconic wares.
Related Articles
|
-
The Seeking Alpha 100
See allThe top 100 stock
market authors
selected for publication
Seeking Alpha 100 » -
Fastest Climbers
Authors with the largestSee all
increase in followers
in the last 7 days
Fastest Climbers » -
Top Commenters
Top commenters,See all
as ranked by their peers
Top Commenters » -
Top Instabloggers
The 100 most active
Instabloggers.-
1
David Fry
-
2
TraderMark
-
3
Don Dion
-
4
Cliff Wachtel
-
5
Mike Havrilla
Top Instabloggers » -
1
-
Top StockTalkers
TopSee all
StockTalkers.
Top StockTalkers »
This article has 25 comments:
Yes, their store sales dropped. But an increasing amount of Apple's sales came from international territory where Apple has only 25 or its 275 total stores.
In most times this passes for DIVERSIFICATION but I guess it's not enough that Apple posted its best-ever revenue month in the middle of the worst recession in at least 30 years, if not a half-century or more.
I think they'll keep the pedal to the metal inf R&D and will exit this recession with some great new products in the pipeline.
Yes, the malls are empty. Yes, people are spending less on vanity items. Yes, Apple products are relatively expensive when compared to cheap alternatives. But did anyone doing this frivolous research make the time or effort to even glance at Apple's most recent quarterly report?
I suppose Apple's biggest mistake resides in their ability to thrive during what can arguably be described as and economic depression.
And -- please help me understand here -- why is it that everyone else on the planet is copying Apple's business plan and products?
Shame on Apple. Don't they know that they're supposed to go out business?
On Feb 02 03:34 AM User 689427 wrote:
> Mark Veverka is the worst columnist at Barron's and has been for
> years.
On Feb 02 04:14 AM SkateNY wrote:
> I can't comment on his columns, if only because I'm not familiar
> with his work. What do, based his most recent missive, is that he's
> either clueles, toxically biased, lazy in the extreme, or just plain
> stupid.
So, this guy from Barrons is under the impression that component suppliers only supply parts for machines that Apple sells through the retail channel and nowhere else? Do the machines from other channels work by using magic?
Incredible... and smells like an agenda.
and/or short.
What it really boils down to is that financial WRITERS, can't, or don't, READ.
Even worse, they apparently don't don't go out and get into the trenches to accurately gauge what the TRUE consumer sentiment is. A few years back I made a lot of money in Harley-Davidson by going to many of their dealerships and talking to salesmen and customers, and just watching what was going on, before I bought the Harley stock. They had just released the new 96" engine coupled with the new (to touring bikes and Softails) 6-speed transmission. The new bikes were selling like hotcakes, but the reason I bought the stock was because people were trading in almost-new 88" 5 speed bikes because they just simply had to have the new model. They were getting reamed on the trade-in value, but that didn't stop them from leaving the dealer with a big smile on their face. I sold the Harley stock when its price dropped $5/share from the high 70's, having gained almost 40% on my investment in a few months.
I've spent a lot of time visiting Apple retail stores too. During the thick of the holiday shopping season when foot traffic and sales in the malls was just so-so, Apple stores were crowded and people were buying; the proof is in their recent quarterly report. I knew something good would be evident in their quarterly report when I saw a yuppie-looking couple, with their toddler sitting on the floor of the Apple store near one of those big balls they have lying around. The couple and a salesperson were smiling while observing the toddler's reaction (and interaction) with what appeared to be some kind of animated cartoony child's program or screen saver that was being displayed on what must have been a 24"LCD monitor (which the salesman placed on the floor so the child could see it). A few moments later the couple left the store with a new computer, monitor, and a host of other odds and ends, having received the toddler's apparent approval. I say apparent because I never heard the child speak, he just made sounds, and in fact I never saw him toddle either, so maybe he was just at the crawling age.
*Apple sold 300,000 more computers this holiday quarter than last holiday quarter
*Apple sold 500,000 more iPods
*Apple sold 2.16 million more iPhones
You are partially correct in that the margins can improve in times when the industry is slumping due to Apple's increasing power.
Also, don't forget the iPhone deferred revenue, which adds 25 cents EPS each quarter at a minmum.
The rest of the market will indeed SHRINK.
Why? In tough times people do not waste money on junk products.
So look out Microsoft.
The real news would/could be that Mall traffic is down xxx% but that the share of that traffic that Apple gets is up yyy%. It shows resiliency and continued popularity relative to other products. Half full or half empty.
Apple stores function not only as 'point of sale' ...they function as 'hands on ads' and the place that reassures the potential customer that Apple cares about its consumers and will take care of them...i.e... good tech support that's fast and friendly.
The experience in an Apple store is like no other. So if the consumer plays with the toys and has a good experience, then goes home to think about it and orders online, the store has served it's purposed, which is to sell Apple products.
The link might not be obvious, but it's there. And anyone who's been in an Apple store once and then bought something, even online, will go back and probably bring someone else.
It's the one place where you can play with all the stuff, endlessly, and ask all the questions and have a great time doing it. I don't think we're going to see Apple stores closing any time soon...or Apple NOT opening new ones.
Lug these out of the mall, across the parking lot? I don't think so! (I'm 5'3" and 40+) Go home, place order with Apple over the phone or on website, since SHIPPING IS FREE and someone else will lug that 24" IMac and printer up my stairs.
Yup! Apple is doomed! Doomed, I tell you..... Get a life, Barrons!
On Feb 02 08:52 AM dynazor wrote:
Wow, needless to say,I was impressed by your dedication to investigating and making decisions on stocks firsthand. Please excuse me but my Wall St. history is a bit this as is my trading, but wasn't that the Peter Lynch' style. ,I believe that's his name.
This is in no way a trash comment to you by insinuation of using others techniques, far from it. Lots of people know of it, how many people like yourself actually do it. Therein lies my point. ( is that the correct use of 'lies'? Never got that part of English class with that word or words. Its investing,not inwesting)
Anyway, the whole point of my comment is simply this:
WHERE ARE YOU GOING NEXT???
Thanks
Staples
PS: I hope you didn't mind the tiny little attempt at a little bit of humor. I didn't go to business school. I was out driving all over trying to pass the entrance exam to headliner at comedy clubs. Couldn't get past ... 'Middle school"
> Even worse, they apparently don't don't go out and get into the trenches
> to accurately gage what the TRUE consumer sentiment is. A few years
> back I made a lot of money in Harley-Davidson by going to many of
> their dealerships and talking to salesmen and customers, and just
> watching what was going on, before I bought the Harley stock. They
> had just released the new 96" engine coupled with the new (to touring
> bikes and Softails) 6-speed transmission. The new bikes were selling
> like hotcakes, but the reason I bought the stock was because people
> were trading in almost-new 88" 5 speed bikes because they just simply
> had to have the new model. They were getting reamed on the trade-in
> value, but that didn't stop them from leaving the dealer with a big
> smile on their face. I sold the Harley stock when its price dropped
> $5/share from the high 70's, having gained almost 40% on my investment
> in a few months.
>
> I've spent a lot of time visiting Apple retail stores too. During
> the thick of the holiday shopping season when foot traffic and sales
> in the malls was just so-so, Apple stores were crowded and people
> were buying; the proof is in their recent quarterly report. I knew
> something good would be evident in their quarterly report when I
> saw a yuppie-looking couple, with their toddler sitting on the floor
> of the Apple store near one of those big balls they have lying around.
> The couple and a salesperson were smiling while observing the toddler's
> reaction (and interaction) with what appeared to be some kind of
> animated cartoony child's program or screen saver that was being
> displayed on what must have been a 24"LCD monitor (which the salesman
> placed on the floor so the child could see it). A few moments later
> the couple left the store with a new computer, monitor, and a host
> of other odds and ends, having received the toddler's apparent approval.
> I say apparent because I never heard the child speak, he just made
> sounds, and in fact I never saw him toddle either, so maybe he was
> just at the crawling age.
>
>
I was in Restoration Hardware last Saturday. Over a dozen frustrated customers were lined up to pay with only TWO employees. After a ridiculous 15-minute wait, I was told the product I wanted was out of stock. ATTENTION AAPL MANAGEMENT: This is how you run a recession! Piss off, and then turn away paying customers.
And it is often the plan to browse at the store and have it delivered free via the online store. Who wants to lug the equipment home when UPS will bring it to your door for you?
On Feb 03 01:20 AM Channon wrote:
> Apple had better cut back staffing levels, inventory and business
> hours at their retail stores, just like the other retailers. If they
> maintain adequate amounts of product people want, sensible staffing
> levels and convenient hours, they won't successfully reduce their
> sales.
>
> I was in Restoration Hardware last Saturday. Over a dozen frustrated
> customers were lined up to pay with only TWO employees. After a ridiculous
> 15-minute wait, I was told the product I wanted was out of stock.
> ATTENTION AAPL MANAGEMENT: This is how you run a recession! Piss
> off, and then turn away paying customers.