Apple Inc (AAPL) Has The Advantage Of Lower Rent At Malls


Apple Inc (NASDAQ:AAPL) appears to expand its retail sales by opening more outlets in malls. The company was able to reach an agreement in malls at a much cheaper rate than what others are paying. Obviously, this could do more with the traffic footprint it creates.

Disparity

Apple Inc (NASDAQ:AAPL) will pay two percent of its sales to malls, which will be measured by square footage. On the other hand, other tenants were paying 15%, according to a report. The disparity in rent was attributed to the technology bellwether’s capacity to draw big crowds to its stores.

The belief was that customers would likely stay in the mall less compared to customers visiting anchor tenants such as departmental stores where consumers stay to browse. However, this has not prevented an upswing in leasing prices for the storefronts situated near or next to Apple outlets.

A representative of Apple Inc (NASDAQ:AAPL) has reportedly said that its retail locations witnessed approximately one million visitors every day. This represented nearly 12% of its annual revenue of $183 billion in the fiscal year 2014.

Average Store Sales

The company’s average store generated approximately $6,000 in sales per square foot. As far as the top performing locations, they reach as much as $10,000 per square foot. However, the figure $6,000 remained the same since 2012. The technology bellwether’s sale numbers were very high, enabling it to distort the normal lease rates, which were partly calculated on the basis of the overall performance of a mall.

To the credit of Apple Inc. (NASDAQ:AAPL), retailers reportedly seek malls to exclude data of Apple store from overall statistics of sales. In the December quarter, the company indicated that it spent $3.5 billion towards leasing retail space. At the end of the December quarter it has close to 450 stores in operation throughout the world.

Viraj Shah

Viraj Shah has completed M.Com (Finance) and is currently pursuing his CFP. He tracks US markets along with other global markets like India very closely. He is very passionate about stocks, real estate, and technology. He also believes that money can always be made in the market.

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