Apple Store revenue grows to 31% of Apple's income for 2019

Apple Stores are performing better than ever for the company's sales, analysis of Apple's 10-K filing by JP Morgan suggests, and at the same time Apple accelerated its rate for repurchasing shares in August, improving prospects for long-term investors by rebuying at opportunistic times.

The Form 10-K submission to the Securities and Exchange Commission is performed at the end of a company's fiscal year, with Apple's issued alongside its most recent quarterly results. The full-year report offers further insights about its financial performance, as well as details about its subsidiaries and other elements not typically included in the usual quarterly reports.

Observations from JP Morgan of the 10-K filing seen by AppleInsiderreveals Apple's retail strategy is "driving greater direct purchases from customers," with Apple Stores and its website accounting for 31% of total revenue for the financial year. This is an improvement from the 29% seen for the 2018 fiscal year and 28% in 2017.

It is suggested direct distribution revenue rose 5% year-on-year to $81 billion for the year, while indirect distribution revenue from other retailers and sales sources declined a similar percentage to $180 billion.

The greater sales from Apple's own outlets is likely to help drive AppleCare revenues, which in turn helps boost Apple's Services revenue in general.

Apple also included a deferred revenue balance of $8.1 billion for the 2019 fiscal year, down from $8.8 billion for the previous year. Apple anticipates 68% of the deferred revenue will be recognized over the next 12 months, which JP Morgan implies means at least $5.5 billion of it will account for Services revenue for 2020's results.

Further, estimates of hardware unit sales of 280 million for 2019 means an average of $12 per unit in deferred revenue will be recognized over the next 12 months, then $6 per unit over time.

JP Morgan also noticed an uptick in share repurchases during August, when Apple had low share price levels hitting $193 per share. While in July Apple rebought 24 million shares, the pace accelerated in August to 35 million shares, then went down to 27 million in September.

This apparently demonstrates a "willingness to use repurchases opportunistically and limit downside for investors," JP Morgan reckons. The activity still leaves Apple with repurchase authorizations of $78.9 billion outstanding at the end of the year.

6 Comments

lkrupp 19 Years · 10521 comments

About 5 years ago

Yet another Apple success story the pundits said would fall flat on its face. Longtime Apple users screamed bloody murder that their local reseller shops, usually hole-in-the wall mom and pop stores would be forced out of business. They were. The big box retailers like Best Buy, CompUSA, Sears, and the rest treated Apple like the proverbial red headed stepchild. With the exception of Best Buy, they are all gone, forgotten, at the bottom of the trash heap of history. Then there are the businesses that tried to hop on the company store train. There were Sony stores in malls, Bang and Olufsen stores, Bose stores, all gone. Now we have Microsoft stores that are largely empty and just happen to be located close to Apple stores. Samsung stores are apparently a joke. My grudge against those retailers remains today and I always buy my Apple gear directly from Apple.

neoncat 5 Years · 165 comments

About 5 years ago

lkrupp said:

My grudge against those retailers remains today and I always buy my Apple gear directly from Apple.

Why? So you can pay more? Buy from wherever is cheapest, has what you want, and is selling genuine goods/is an authorized reseller to make sure your warranty coverage is in place. There's no difference in the object, they all came from the same dark corner of Shenzhen. Holding a "grudge" about where you buy stuff is silly.

lkrupp 19 Years · 10521 comments

About 5 years ago

neoncat said:

lkrupp said:

My grudge against those retailers remains today and I always buy my Apple gear directly from Apple.

Why? So you can pay more? Buy from wherever is cheapest, has what you want, and is selling genuine goods/is an authorized reseller to make sure your warranty coverage is in place. There's no difference in the object, they all came from the same dark corner of Shenzhen. Holding a "grudge" about where you buy stuff is silly.

And by cheapest it usually means $50 or less for new products. Closeouts and refurbs are a different matter. Not worth the effort on my part. But that’s my choice isn’t it.

AppleExposed 6 Years · 1805 comments

About 5 years ago

lkrupp said:

Yet another Apple success story the pundits said would fall flat on its face. Longtime Apple users screamed bloody murder that their local reseller shops, usually hole-in-the wall mom and pop stores would be forced out of business. They were. The big box retailers like Best Buy, CompUSA, Sears, and the rest treated Apple like the proverbial red headed stepchild. With the exception of Best Buy, they are all gone, forgotten, at the bottom of the trash heap of history. Then there are the businesses that tried to hop on the company store train. There were Sony stores in malls, Bang and Olufsen stores, Bose stores, all gone. Now we have Microsoft stores that are largely empty and just happen to be located close to Apple stores. Samsung stores are apparently a joke. My grudge against those retailers remains today and I always buy my Apple gear directly from Apple.

Another news story that will be quietly swept under the rug.

"With the exception of Best Buy, they are all gone..."

Hmmm I wonder why?

" My grudge against those retailers remains today and I always buy my Apple gear directly from Apple."

I keep grudges for a long time too. Like the idiots who claimed iPhone wouldn't work and now use knockoffs that function and look identical, when they said iPad was just "a giant iPod touch" that no one needed and now they're using some crappy knockoff from Samsung or 20 buck Amazon Fire and recently the idiots who claim Samsung/Huawei stores "look nothing" like Apple Stores even though you couldn't tell them apart from a short distance.

neoncat said:

lkrupp said:

My grudge against those retailers remains today and I always buy my Apple gear directly from Apple.

Why? So you can pay more? Buy from wherever is cheapest, has what you want, and is selling genuine goods/is an authorized reseller to make sure your warranty coverage is in place. There's no difference in the object, they all came from the same dark corner of Shenzhen. Holding a "grudge" about where you buy stuff is silly.

The experience is why I shop there. You may be happy getting your Apple TV from an abandoned aisle at a Wal Mart but I like to make it a memory especially with family. Everyone has their reasons. I bought my first Apple TV 4K at an Apple store with younger siblings who'd never been to an Apple Store. They LOVED it as they played with devices and colored/drew on iPad Pros with Pencils. BUT I've also bought an Apple TV from AT&T during a promotion which I got it for free.

If everyone thought like you, Apple Stores would be closed.