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Best Buy Deal to Increase Apple Distribution
by , 7:45 AM EDT, April 5th, 2007
Apple and Best Buy's store within a store pilot program is expanding, and will more than offset the loss of distribution points caused by CompUSA closings. The expansion will include 200 stores by fall 2007, and Piper Jaffray analyst Gene Munster expects many will be walled off with a boutique feel.
"What is clear, you won't wander around Best Buy to shop for Apple," he said. "A good way to think about Apple & Best Buy is the Coach or Chanel store within a store concept at Nordstrom."
In February 2007, CompUSA announced that it is closing 126 of its retail locations, which means Apple is losing its presence in all of those stores. Apple's expansion into 200 Best Buy stores, however, will create 74 more additional distribution points than are available today.
Apple already has 7,500 distribution points throughout the world, so the Best Buy store within a store expansion equates to only a 2 percent increase in Mac distribution locations, or less than one percent in increased sales. More importantly, the expansion indicates the pilot program has been successful for both Best Buy and Apple, and that success could eventually lead to a full Apple presence in all 822 Best Buy retail locations.
Mr. Munster commented "Due to CompUSA's closings, the addition of 200 Best Buy stores to the Mac channel means that Mac distribution points continue to increase. But this news indicates that the pilot is succeeding, and further expansion should have a material impact."
Piper Jaffray is maintaining an "Outperform" rating and target price of US$124 for Apple stock. Apple is currently trading in the pre-market at $94.33, up 0.06 (0.06%).
If you are interested in Apple's stock, join our forum members in the Apple Finance Boards, a moderated forum for Apple Investors and people who are interested in Apple's financial dealings. For other stories regarding Apple's stock activity, visit our updated Apple Stock Watch Special Report.
Observer Comments
Wed Apr 11, 2007 9:15 am Subject: Echo of Apple and Tesco in UK
This sounds like a slow echo of the store within a store deal that Apple made with Tesco here in the UK. It was a joke to say the least as Apple had a small conner in the back of the store and almost no software on site. When I went there to get a ADSL for my mac mini they said that they did not carry that kind of stuff and that they could have it sent over from the Apple store by the end of the week if I left a deposit. There was one rep on site and his knowledge was just about zero outside the products on hand. I would not hold my breath in hope of this being any better.
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