As vacancies increase and retail sales throughout the U.S. remain a shadow of the decade’s boom, Apple Inc.’s stores are defying the recession.
At Fifth Avenue and Fifty-Ninth Street, the noon-day line on Aug. 11 snaked out the front door. More than a dozen people waited to buy an iPhone, which runs from $99 to $299, plus at least another $70 a month for a service plan. Every computer, seat and station was occupied by a visitor to midtown Manhattan.
Apple, based in Cupertino, California, increased revenue at its stores by 2.5 percent in the first six months of the year to $3 billion as the rest of the retail industry suffered. During the same period, sales at all U.S. retailers fell 9.2 percent compared with the first half of 2008, according to the U.S. Commerce Department.
Retail sales in New York City have fallen 8 percent to 10 percent from comparable 2008 levels, according to the Federal Reserve’s Beige Book business survey published July 29.
“Even if they are not spending money elsewhere, people are still spending money on technology gadgets,” said Patricia Edwards, a retail analyst and founder of Storehouse Partners LLC in Bellevue, Washington. “It’s both a need and a want. It fulfills that retail-therapy component.”
Apple’s store performance in the last year has been driven by the iPhone, according to Charlie Wolf, an analyst who covers Apple at Needham & Co. in New York. The retail operation saw a 22 percent increase in traffic during the quarter ended June 27, hosting a total of 38.6 million visitors, Chief Financial Officer Peter Oppenheimer said on a conference call in July.
Apple’s shares have almost doubled this year. The stock climbed $2.89, or 1.7 percent, to $169.22 on Aug. 21 in Nasdaq Stock Market trading.
A Mercedes Per Square Foot
Apple’s Fifth Avenue emporium probably has annual sales of more than $350 million, topping any of the chain’s other outlets, said Jeffrey Roseman, executive vice president of real- estate broker Newmark Knight Frank Retail in New York. The location is 10,000 square feet, putting its sales per square foot at a minimum of $35,000, based on Roseman’s estimate.