Seeking Alpha
Recommended for you:
Long/short equity, deep value, special situations
Profile| Send Message|
( followers)  

Brick-and-mortar is alive and well; that is, if the selling is done by Apple (NASDAQ:AAPL). Apple's retail division is hugely profitable, raking in $4.4 billion in operating income over the last 4 quarters. Its physical stores have expanded sales and earnings at a rapid clip, leaving venerable and higher-stored retailers in the dust. Profits have climbed quickly. Last year, the retail division brought in $3 billion in operating income; the segment already has made that much in just the last 6 months.

I've already reported Apple retail is growing sales faster than Amazon. (If the physical stores were valued at Amazon's heady 188 PE, Apple's brick-and-mortar would be worth a crazy $827 billion alone.)

Check out Apple's physical stores vs other chains:

(Data courtesy of Morningstar.com and 10Ks. 2012 is in TTM form.)

In other words, in a very short time, Apple earned more from its 363 stores than Yum's 37000, Best Buy's 1000+, Walgreen's 8000+, TJX's 2000+, Costco's 600, or Macy's 800+.

This is Apple's smallest segment, representing about 11% of sales. The stores post remarkably high operating margins seen by very few retailers. Apple retail joins the ranks of Coach (NYSE:COH) and Lululemon (NASDAQ:LULU) when it comes producing powerful margins.

Disclaimer: The opinions in this document are for informational and educational purposes only and should not be construed as a recommendation to buy or sell the stocks mentioned. Past performance of the companies discussed may not continue and the companies may not achieve the earnings growth as predicted. The information in this document is believed to be accurate, but under no circumstances should a person act upon the information contained within. We do not recommend that anyone act upon any investment information without first consulting an investment advisor as to the suitability of such investments for his specific situation.

Source: Apple's Brick-And-Mortar Supremacy