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Can Apple, Inc.'s Retail Stores Pick Up Steam Again?

CEO Tim Cook said last week in Apple's  (NASDAQ: AAPL  )  second-quarter earnings call that former Burberry CEO Angela Ahrendts will begin her position as its new retail and online leader this week. The timing for new leadership over Apple's retail arm couldn't be better. With other tech giants introducing more Apple-like retail concepts and Apple's retail sales flattening out on a year-over-year basis, it's more important than ever for the company to find new ways to stand out.

Apple's retail arm today
It would be foolish to suggest Apple isn't running a successful retail business. The company has meaningfully higher retail sales per square foot than any other retailer in the U.S., according to Retail Sails. Apple handily beat luxury retailers like Tiffany and Michael Kors on the telling metric in 2013. In fact, there's a good chance Apple is the most successful retailer in the world.

But as the world's most valuable publicly traded company, Apple faces a unique challenge: large numbers. As the saying goes, "What goes up must come down." In 2013, Apple's successful retail stores seemed to hit a wall. Average revenue per store slipped slightly in 2013 to $50.2 million from $51.5 million the year before. A similar trend was evident in Apple's second quarter of 2014. Retail sales were basically flat from Q2 2013 to Q2 2014 despite more store openings and total revenue growth of 5% in the same period.

And beyond a face-off with large numbers, other tech companies are jumping in with their own Apple-like stores to connect with consumers and show off their brands. Microsoft, for instance, is already rolling out retail stores and Google is rumored to be planning some of its own.

Source: Burberry.

Enter Angela Ahrendts
Ahrendts has a tough job cut out for her. And the pressure is on. The role she has taken over has seen significant turnover in the last couple of years -- a very uncommon trend for Apple executive positions. After Ron Johnson left Apple in 2011, he was replaced by John Browett. Browett was then ousted less than a year later.

Not only will Ahrendts join Apple at a time when its retail arm seems to be slowing, but if rumors are true, she will also be leading Apple retail into a new category: wearable tech. If the company does launch the alleged iWatch, fashion may take a greater role in Apple's products and retail experience.

Will Ahrendts take all these challenges in stride? It's tough to say. But it's good news for investors to see fresh leadership during such a transitional time. And if Ahrendts' tenure at Burberry offers any glimpse into her potential at Apple, the tech giant's retail arm may be in for some positive changes. Perhaps an Ahrendts-led retail overhaul combined with some new product categories to boost store foot traffic will return Apple stores to sales growth in the coming years.

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Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On April 28, 2014, at 4:24 PM, mattack2 wrote:

    "according to a Retail Sails."?


    Sails? Even with "Sales", it doesn't make sense.

  • Report this Comment On April 28, 2014, at 5:00 PM, TMFDanielSparks wrote:


    That's the name of the company: Retail Sails. You can Google it if you would like.

  • Report this Comment On April 28, 2014, at 6:32 PM, HJ66 wrote:

    Sorry, @TMFDanielSparks, grammar is still incorrect. You need to remove the "a". @mattack2 can be forgiven for being confused. In fact I would suggest the edit "according to industry analyst Retail Sails".

  • Report this Comment On April 28, 2014, at 9:32 PM, TMFDanielSparks wrote:


    Good call. Thanks :). Fixed.

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Daniel Sparks

Daniel is a senior technology specialist at The Motley Fool. To get the inside scoop on his coverage of technology companies, follow him on Twitter.

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