Analyst: Apple’s store closures have little impact on revenue, consumers will move online

Beijing time on the morning of March 17, according tomedia reports, if the closure of almost all the world’s stores in a few weeks, for most large companies, will be a huge financial blow. But for Apple, there’s a slight exception. In response to the new corona virus pandemic, the company has extended the closure of all stores outside mainland China until March 27, but experts do not seem to be worried about the company’s operations.

Analyst: Apple's store closures have little impact on revenue, consumers will move online

Experts say 20 to 30 percent of Apple’s revenue comes from brick-and-mortar stores. The company now relies more on these retail stores to let consumers know about the company’s various hard software products and sell them. The stores are also Apple’s repair center, and are supported by Apple’s original Genius Bar.

In the fiscal quarter a year ago, Apple generated $58 billion in revenue and retail stores accounted for between $11 billion and $17 billion. Getting close to last year’s revenue figures will certainly be difficult at a time when the new corona virus is raging. Dan Ives, an analyst at Wedbush, for example, thinks closing stores will reduce Apple’s revenue by about 5 percent this quarter. But Gene Munster, an analyst at Loup Ventures, reckons that a large portion of Apple’s retail sales will be moved online, resulting in a drop in revenue from store closures that would be only about 1 percent, or about $100 million in losses.

Most importantly, experts say, the iPhone maker does not need to use huge cash reserves to ease the drop in revenue. Ives said Apple will continue to be profitable and continue to generate cash flow during store closures. Munster agrees, but he also believes that store closures could affect shareholders even if they don’t affect Apple’s business. “This could dampen the company’s annual dividend increase,” he said. But Mr Ives believes Apple may use cash to buy shares from investors to boost share prices. Apple’s share price has fallen sharply to $242 from $319 a month ago.

Finally, experts agree that Apple’s stores are closing to protect employees and customers, not to hedge against a slowdown in the supply chain. “Closing stores is a model move for Apple. Other companies will follow suit. Experts say the move is apple’s “brilliant move to put the health of its employees and customers ahead of the sale of iPhone products.”

Looking ahead, analysts believe Apple will eventually overcome the impact of the virus outbreak on its business. Apple’s profitability and cash reserves will allow the company to withstand the outbreak better than others, they said, and apples will be back on track as usual as the impact of the new corona outbreak on everyday life fades. “All in all, (Apple) will be fine. (Tianqi)