Apple 2013 Annual Report Download - page 34

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The growth in net sales during 2012 was mainly due to strong demand for the third generation iPad. The Rest of
Asia Pacific segment experienced significantly lower year-over-year growth in net sales compared to all of the
Company’s other operating segments due primarily to a decrease in iPhone sales. This decrease reflects the
timing of iPhone 5 launches in the Rest of Asia Pacific segment, which only occurred in a limited number of
countries during the fourth quarter of 2012.
Retail
The following table presents Retail net sales information for 2013, 2012 and 2011 (in millions, except for store
counts):
2013 Change 2012 Change 2011
Net sales ........................................... $20,228 7% $18,828 33% $14,127
Percentage of total net sales ........................ 12% 12% 13%
U.S. stores .......................................... 254 250 245
International stores ................................... 162 140 112
Total store count ................................. 416 390 357
The growth in net sales during 2013 was primarily driven by increased unit sales of iPhone and iPad following
the new product introductions in the first half of 2013 and increased sales of services. With an average of 403 and
365 open stores during 2013 and 2012, respectively, average revenue per store decreased to $50.2 million in
2013, compared to $51.5 million in 2012.
The growth in net sales during 2012 was driven primarily by increased demand for iPhone following the launches
of iPhone 4s and iPhone 5, strong demand for the third generation iPad and iPad 2, and higher Mac net sales.
Lower year-over-year growth in net sales in the Retail segment during 2012 compared to the Company’s other
segments reflects the significant growth in iPad indirect distribution channel expansion. With an average of 365
stores and 326 stores during 2012 and 2011, respectively, average revenue per store increased 19% to $51.5
million in 2012 compared to $43.3 million in 2011.
The Retail segment’s operating income was $4.0 billion, $4.6 billion and $3.1 billion during 2013, 2012, and
2011, respectively. The year-over-year decrease in Retail operating income in 2013 is primarily attributable to
lower gross margin similar to that experienced by the Company overall, partially offset by higher net sales. The
year-over-year increase in Retail operating income in 2012 is primarily attributable to higher overall net sales
that resulted in significantly higher average revenue per store during 2012.
Gross Margin
Gross margin for 2013, 2012 and 2011 are as follows (in millions, except gross margin percentages):
2013 2012 2011
Net sales ....................................................... $170,910 $156,508 $108,249
Cost of sales .................................................... 106,606 87,846 64,431
Gross margin ................................................... $ 64,304 $ 68,662 $ 43,818
Gross margin percentage ...................................... 37.6% 43.9% 40.5%
The gross margin percentage in 2013 was 37.6% compared to 43.9% in 2012. The year-over-year decrease in
gross margin in 2013 compared to 2012 was driven by multiple factors including introduction of new versions of
existing products with higher cost structures and flat or reduced pricing; a shift in sales mix to products with
lower margins; introduction of iPad mini with gross margin significantly below the Company’s average product
margins; higher expenses associated with changes to certain of the Company’s service policies and other
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