Apple's retail operation continues to deliver good results, the company revealed during its financial results conference call yesterday.
Despite its retail division not yet returning a profit, it is “acting as a powerful tool for invigorating interest in our products”, Apple said. Retail revenues increased from $63 million in the third quarter to $102 million in the fourth. Losses for running retail fell to $3 million from $6 million. MacCentral reports that Apple's retail outlets are on course to attract an annual revenue rate of almost $12 million per store.
Apple chief financial officer Fred Anderson said: "The retail division has knocked the cover off the ball," this quarter. The company is using its retail outlets to reach beyond the installed sales-base. The retail outlets are also making significant sales of "beyond the box" items, including AppleCare and iPod, Anderson said.
The outlets have seen 40 per cent of hardware sales go to non-Mac users – good evidence of the success of the company's "Switch" campaign. "The average conversion rate per store visitor has increased," Anderson revealed. The stores attracted 2.25 million visitors, Apple claimed.
Nine more Apple retail stores opened during the quarter, meaning 40 stores are now open, with ten more planned to open by the last Thursday in November. This means 31 per cent of the US population will live within 15 miles of a store, Apple claimed. Operating costs will increase over the next quarter as a result of the new shops.
Apple's US education sales climbed four per cent sequentially from the prior quarter, but fell 12 per cent from the year-ago quarter. Anderson confirmed reports that the company's education sales in the June and September quarters were usually flat. Anderson "hoped" the sequential sales increase would at least maintain the company's market share in the all-important segment.
Anderson predicted declining component costs, but said these would be offset by increased operating expenses as Apple opened new retail outlets and invested in more advertising spending.
He also touched on issues facing US president George Bush's administration: "With the state of the economy and the threat of war, we don't see any point in being overly optimistic," he said. "We're planning for the worst and hoping things will be better."