Daily Management Review

Apple Stores to Open In India


Apple is giving a go-ahead for the opening of retail outlets in India, reported Bloomberg, citing people familiar with the situation.

Tim Cook’s plans in relation to India, the country with a population of over 1.2 billion people, was pronounced already past year. According to Indian law, a company has the right to open its brand shop only on the condition that not less than 30% of products sold there are produced locally, i.e. on India’s territory. In November, the law has been revised, what gave Apple chances to build its retail chain in the country.

At this point, Apple's share in the Indian smartphone market is less than 2%, what obliged to lack of smart phones of the lower and middle price segments, as well as the state’s overall economic condition. Now, Apple’s gadgets are sold through intermediaries.

For Apple, India is a market with a long-term perspective. This country can serve as a growth driver and replace China as the fastest growing market. In the latter, the corporation achieved significant sales growth, which, however, has slowed down, and the same thing is happening in the developed markets.

Now, Apple’s shares are under pressure, associated with fears of falling demand in China, including Hong Kong and Taiwan (account for 25% of Apple’s revenue). Therefore, many analysts agree that emerging markets are main engine of growth for the company, which generates about two-thirds of the revenue from smartphones’ sales. Some experts believe that 2016 iPhone world sales can even decrease as compared to the previous year.

Currently, Apple has about 460 branded stores worldwide. In the current year, the company is planning to open another 50. According to some analysts, Apple stores bring the most revenue per square foot of all retail outlets in the United States.

Recently, Apple announced financial results for the I quarter of 2016 fiscal year, ended December 26, 2015. The Company managed to set a new record for revenue, but the figure fell short of analysts' forecasts. Besides, its own forecasts for the current quarter suggests that Apple may face a drop in performance for the first time in a long run.

The company's revenue for the period totaled $ 75.9 billion; net profit - $ 18.4 billion, or $ 3.28 per share. For comparison, the company's revenue in the same quarter of the previous year amounted to $ 74.6 billion and net quarterly profit - $ 18 billion, or $ 3.06 per share.

In I quarter of 2016 fiscal year, Apple managed to sell 74.8 million iPhones, while analysts expected sales of 75 million units. It is worth noting that Tim Cook’s company has sold 74.5 million iPhone in the previous quarter, which means that the sale of branded smartphones, it seems, hit the ceiling.

source: bloomberg.com