Apple 2014 Annual Report Download - page 34

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Retail
The following table presents Retail information for the years ended and as of September 27, 2014, September 28, 2013 and
September 29, 2012 (dollars in millions):
2014 Change 2013 Change 2012
Net sales $21,462 6% $20,228 7% $18,828
Percentage of total net sales 12% 12% 12%
U.S. stores 259 254 250
International stores 178 162 140
Total store count 437 416 390
Headcount 46,200 42,800 42,400
The growth in Retail segment net sales in 2014 was primarily driven by increases in net sales and unit sales of iPhone and Mac,
partially offset by declines in net sales and unit sales of iPad and iPod. With an average of 424 and 403 open stores during
2014 and 2013, respectively, average revenue per store increased to $50.6 million in 2014 from $50.2 million in 2013.
The growth in Retail segment 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 Retail segment’s operating income was $4.6 billion, $4.0 billion and $4.6 billion during 2014, 2013 and 2012, respectively.
The year-over-year increase in Retail segment operating income in 2014 was attributable to higher net sales and higher gross
margin primarily due to a higher mix of iPhone. The year-over-year decrease in Retail segment operating income in 2013 was
primarily attributable to lower gross margin similar to that experienced by the Company overall, partially offset by higher net
sales.
Gross Margin
Gross margin for 2014, 2013 and 2012 are as follows (dollars in millions):
2014 2013 2012
Net sales $182,795 $170,910 $156,508
Cost of sales 112,258 106,606 87,846
Gross margin $ 70,537 $ 64,304 $ 68,662
Gross margin percentage 38.6% 37.6% 43.9%
The year-over-year increase in the gross margin percentage in 2014 was driven by multiple factors including lower commodity
costs, a favorable shift in mix to products with higher margins and improved leverage on fixed costs from higher net sales,
which was partially offset by the weakness in several foreign currencies relative to the U.S. dollar, price reductions on select
products and higher cost structures on certain new products.
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 warranty costs; price reductions on
certain products, including iPad 2 and iPhone 4; and unfavorable impact from foreign exchange fluctuations.
Apple Inc. | 2014 Form 10-K | 32