Apple is the king of retail sales
The company's stores are the most successful in the sector.
The company averages $5,647 in sales per square foot at its U.S. stores, according to research by RetailSails. That blows away any other retailer at the mall. Tiffany (TIF) comes in a distant second, with sales of $3,085 per square foot, and Coach (COH) is third with sales of $1,824.
Keep in mind that the U.S. national average for shopping malls is $341 per square foot, notes Asymco's Horace Dediu this week. In other words, Apple does about 17 times better than the average retailer. (This looks only at retail sales, not Apple's sales online or through partners.)
Apple also leads the top 20 U.S. retailers in growth, with a 70% increase in sales per square foot over the year before. That's far higher than Lululemon Athletica (LULU), which came in second with sales growth of a little more than 40%. Polo Ralph Lauren (RL) was third with growth of a bit more than 20%.
Dediu has previously shown that there is a strong tie between iPhone sales growth and store sales growth. When there is a hot new iPhone to be had, shoppers flock to Apple's retail stores. That leads to what Dediu describes as the somewhat "bursty" nature of the company's retail store sales.
I imagine the new iPad must have created a sales burst of its own. The company sold 3 million new iPads in three days after the tablet launched in March. Apple's flagship Fifth Avenue store alone sold more than 13,000 iPads in 12 hours -- an average of 18 per minute, reports The Verge.
At the opposite end of the geographic spectrum, let's head to the Jordan Creek Town Center in West Des Moines, Iowa. The 3,000-square-foot Apple store at that mall generates $25 million in sales, about the same as the mall's large department-store anchors, reports the Business Record. That equals $8,333 in sales per square foot -- higher than Apple's U.S. average.
Overall, Apple's retail stores posted a record $6.1 billion in revenue over the holiday quarter, a 59% increase from a year earlier. The company owned 361 stores at the end of last year, and the company said average revenue per store was $17.1 million, up 43% from $12 million a year earlier.
Why do Apple stores do so well? A new book called "The Apple Experience" covers some of the biggest reasons. Apple hires the right employees and serves up the "wow" factor. Apple respects its customers and delivers a consistent experience. It eliminates the clutter in stores and pays attention to design details.
Perhaps more important: Apple stores are fun. They are places you want to visit again and again. And buying something at an Apple store is easier than at any other store out there. You can even go in and buy something by scanning it with your iPhone and then leave without ever talking to an employee.
Apple recently hired the former CEO of Dixon Retail to run its retail operations. The following video has more information on the new hire and the big shoes he has to fill:
Now let get to the 1000 dollarbut now has been revised down to 750 share price by these expletive saying Apple's stock will achieve in a relatively short time.
I would have like to use the actual word which best describes these analysts, but I probably would be censored.
The analysts are the likely the same expletive , which made though wonderful forecasts about similar bubble stocks during dot com bust.
This will mean that Apple as a company is approaching a Trillion dollars in value with a the capital recovery of more than 25 years on the money invested as Apple’s net income will stagnate at 40 billion, due to the enormity of that sum.
Every additional billion of net income will be more difficult to earn, due to its enormous size which is 1000 million. This amount of money buys quite a few Ipads, downloads and other apple products. How many more apple products can the market absorb?
If Apple wishes to capture more market share of sales it will require developing additional products with lower prices as the more affluent markets have been saturated, leaving the less capable markets the task of buying all though millions products which are forecasted to be manufactured and sold by apple in the coming years. Eventually their products will become common place and less desirable. You won’t be that stylist with your new iphone or ipad, you will be just another part of the herd.
Just as computers, big screen TVs and many other electronic devices have been commoditized, so will apple products if they wish to generate more sales. This directly relates to Apple’s value as a company and its allege income growth potential. Lower sale prices for Apple’s products will directly impact its net income and value as a company.
If apple stock price continues to soar to new heights, do not jump for joy as it
has nothing do with its intrinsic value as a company but is just another example of Wall Street manipulation by a handful of Hedge Fund Managers which allows them to collect their billions for managing the working class retirement funds. Seventy percent of Apple’s stock is owned by institutional investors which have colluded to inflate apple stock price, due to its incredible growth rate over the last 5 years and the difficulty in evaluating its most important characteristic which is the marketing of its products.
Eventually, one of the big investors is going to folded there hand and Apple stock will drop like a stone.
If Apple’s Stock Price and Market Capitalization was legitimate and based on fact instead of speculation its stock price would not wildly fluctuate on a daily bases. Establishing Apple’s market capitalization on its historical sales growth which is clearly unsustainable is a deceptive method which many analysts have utilized to promote apple stock as being greatly undervalued though it has increase by more than 250% in the last 2 years.
These are the facts:
Apples 2011 net income is reported to be 26 billion on revenues of 128 billion. This is a 185% increase from Apple’s 2010 net income which was 14 billion. This growth rate will never occur again due to the considerable income apple has achieved.
Many analysts believe Apple will expand it sales by 20% for the next 5 years due to its smaller market share of a sales compare to its competitors. This is a great deception. To accomplish this apple sales will have to increase to 153 billion in 2012 and by 2016 and have annual sales of 318 billion. This will never happen due to the enormous scale of 318 billion.
By comparison NASA Space Shuttle operating budget in it last year was 3 billion. I provide this as an illustration, to give the cheerleaders a clued about the staggering amount of income Apple currently produces.
Apple's average net income over the last 5 years is
11.3 billion. This income average would typically be utilized to estimate a value for and asset or company. How is it possible for a company with an average net income of 11.3 billion to achieve a market capitalization of 590 billion without some form of manipulation by the institutional investors?
I realize there is a difference between market capitalization and the use of a capitalization rate to determine value. However, market capitalization is a qualitative value not easily determine as it represents the public consensus on the value of a company's equity and in Apple’s case it has been inflated.
The use of a capitalization is a quantitative method to determine value from quantifiable data such as income and expenses.
Let’s assume an unlikely scenario that Apple's net income is 40 billion in 2012. To achieve this Apple will have to increase its sales by 157% or by 69 billion, this will never happen. But for this analysis I will utilize a net income 40 billion to determine a value for Apple as a company.
If a typical capitalization rate of 10% is applied to this net income, a value for the company can be estimated:
40 billion / 10% = 400 billion.
I acknowledge the capitalization rates are assumption, but historically a 10% rate is typically used by investors. By this analysis Apple’s market capitalization appears to be in excess by at least 265 billion.
Copyright © 2014 Microsoft. All rights reserved.
VIDEO ON MSN MONEY
Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.
Contributors include professional investors and journalists affiliated with MSN Money.
Follow us on Twitter @topstocksmsn.