Apple Store Traffic Flat, But Sales Are Down

By  |  Monday, February 2, 2009 at 9:11 am

applestoreApple has taken quite a bit of pride in its successful retail operation, and rightly so. It has grown at a rate not seen by other electronics outlets as of late, and sales have been consistently higher every quarter.

Not so for the holidays. Traffic was essentially flat in the fourth quarter, down 1.8 percent. The real drop was in sales, falling 17.4 percent and showing that consumers are buying less, Needham analyst Charlie Wolf found.

“Consumers aren’t in a spending mood,” he quipped to Barron’s (subscription only).

Barron’s Mark Veverka also makes an astitute observation: Apple’s struggles at retail could reverberate. Malls will feel the difference as these stores have become attractions, bringing in new consumers that may have otherwise not shopped the mall.

Another effect is as Apple sells less, it produces less. This sends shockwaves backward into its whole supply chain. Companies that have produced iPod parts know this all too well: an adjustment in Apple’s ordering can cause them to completely miss their own financial goals (it’s happened).

While its certainly alarming to shareholders that one of Apple’s primary revenue drivers are falling upon hard times, consider this: Apple can afford some loss at retail.

As Doug McIntyre at BloggingStocks put it, these stores serve almost as a showroom of sorts for the company: “As long as Apple’s revenues are improving, there is hardly reason to complain,” he argues. I can’t argue with that.


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4 Comments For This Post

  1. sfmitch Says:

    You are painting a completely misleading picture of Apple, Inc.

    1. Apple sales in the December 2008 quarter (which is the Q1 2009) were the HIGHEST EVER

    2. Apple sold 22.7 million iPods in the quarter – the MOST EVER

    3. Apple sold 2.5 million Macs in the quarter – 9% MORE than in Q1 2008

    4. Apple sold 4.36 million iPhones in the quarter – 88% MORE than in Q1 2008

    5. Apple also had a record quarter with the iTunes store

    6. The best part is that because of the way Apple accounts for iPhone sales. Apple actually had an additional $1.6 BILLION of revenue and $700 MILLION of net income.

    7. Apple Retail had a revenue INCREASE of 2% – most EVER. Sure same store sales were down – times are tough, etc. But, think of how much distribution now exists for Apple products than even a year ago.

    Do we really care that Apple is selling less at its’ own stores if it is selling more overall?

    So, you can take your story of Apple imploding and save it for another day.

    Ed, is this whole (falsely) negative spin on Apple, Inc. because they ‘lost’ your contacts??

  2. Tim Says:

    News that Steve Jobs was borne of woman drove sales down.

  3. joecab Says:

    Apple’s retail stores and the iTunes store serve the same purpose: to show you the eye candy that gets you to buy the real stuff like devices and hardware and peripherals. This is why in the grand scheme of things companywide, they probably aren’t as concerned as you may think if either one is profitable in and of itself.

  4. Jeff Says:

    When I will walk around the malls, I’ll see one or two people in other stores, but when I get to the Apple store. It’s crowded. Sometimes it’s so crowded it’s hard to move around in there. Truly amazing. Even in this economic downturn it’s been like that.