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Best Buy Deal to Increase Apple Distribution

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

Show: Subjects Only | Full Comments
Close Name:Guest
Subject: How much Mac software do/will they carry?

Let's hope that Best Buy does a better job than CompUSA did carrying Mac software!

"So, do you have any software?"
"Yes, but make sure you install Windows so you can run it."

Close Name:Guest
Subject: Not as good as it seems

The Best Buy stores and its other stores (FutureShop) in the Toronto area have the worst Apple product support.

The Mac section in these stores are horrible, not well kept like the PC section is. Most of the time the these Macs aren't even on. There's no accessories (Apple or 3rd party) to be seen. Why would people want to Apple computers under these circumstances?

What's even worse, the sales people don't even try to push Apple products. I've heard some say that Macs are S**T.

Appple needs to place their own Apple store sales people (trained by Apple, not Besty Buy) in Best Buy stores, and then the sales will definitely increase.

That's what I've seen in my area, it may be different in the U.S

Close Name:samacgillivray Posts: 5 Joined: 19 Jul 2004
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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