informa
/
2 min read
article

Apple Cutting 1,600 Retail Jobs

The move could signal a slowdown in retail expansion as Apple wants to adjust for what COO Tim Cook calls a "horrendous economy."
Apple reported its best nonholiday quarter ever earlier this week, but those earnings included the loss of 1,600 full-time Apple Store employees.

According to an SEC filing, the company's retail locations had 14,000 full-time employees at the end of the second quarter, a 1,600 drop from the previous quarter. While the company's revenue grew more than 8% year over year, the average revenue per store decline 17%, falling to $5.9 million from $7.1 million in 2008.

The move could signal a slowdown in retail expansion for Apple, as the company adjusts for what COO Tim Cook called a "horrendous economy." The company saw decreased retail margins for the second quarter and said it was primarily caused by weakness in the spending environment. Apple has been averaging 15 new stores a quarter, but it only opened one last quarter. For 2008, Apple opened 45 new stores, but it plans to open only 25 stores in 2009.

The company is increasingly banking on sales of its iPhones, which sold 3.79 million units last quarter, but the touch-screen smartphone is available for sale at multiple locations like AT&T stores, Wal-Mart, Best Buy, and various online retailers. While this does give Apple wider distribution, it has to potentially to eat into sales at Apple-owned stores.

But don't look for Apple to shutter doors any time soon, as the stores are still a popular destination. More than 39 million people visited the retail locations last quarter, and the stores sold more than 430,000 Macintosh computers, about half of which were to customers who had never owned a Mac before.

Additionally, Apple said in its filing that these stores require a "substantial investment in fixed assets and related infrastructure, operating lease commitments, personnel, and other operating expenses. ... The company would incur substantial costs if it were to close multiple retail stores."


The iPhone may be your next full-function computer. InformationWeek has published an independent analysis of this topic. Download the report here (registration required).