Research Update: Apple Retail UK Limited
Taking a bigger bite of market share...
In one of my early substack posts I provided estimates for AppleCare sales in the UK based on the application of a method I first picked up from the US Warranty Week publication1. Over the last 10 months, it’s become increasingly apparent that direct manufacturer-consumer relationships are now far more important than they once were2. So, whilst Apple subsidiary filings generally give little away, with the latest release this week, I thought it probably worth expanding the AppleCare analysis and cover the UK retail entity Apple Retail UK Limited (04996702) for FY2024 up to 28/09/2024.
Recap
To say Apple's international entity map is comprehensive would test even the great British understatement. Figuring out what's what and how the inter-company flows work takes time and effort for any external observer. There are often several entities per country in addition to entities that operate across countries, with multiple entity types per jurisdiction. There are inter-company service providers (e.g. Apple Europe Limited generating £472.6m in profit after tax) and then there's the holding company Apple Operations International through which almost all non-US business flows. As a side note, the stark margin differential between retail entities and these service providers illustrates sophisticated transfer pricing and value allocation across the structure. It’s no wonder governments can’t keep up with it. However, I am fairly sure that the main UK retail operations flow through Apple Retail UK Limited. And this last filing was pretty impressive step up from FY2023…
Performance
Given that we were still shaking out the cost-of-living crisis alongside the higher interest rate environment, conditions that typically constrain discretionary spending on premium consumer electronics, Apple’s UK FY2024 retail performance was impressive. Revenues climbed 54% from £1.67bn to £2.58bn. After a few flagship store openings over the last few years, on a revenue per store basis, they’re up to £64.4m.
There are strong arguments to suggest Apple’s retail stores may have a particular product line sales bias. However, if we ignored that momentarily and apply the product revenue splits that Apple provide at the Inc. level, UK product line revenue would be as follows: