Apple is taking a massive bite out of retail sales in the U.S., new research shows.
Booming demand for the technology giant's iPhone, iPad and Macintosh personal computers has made Apple (AAPL) the fastest-growing major retailer in terms of sales growth in the U.S. In the first three months of 2011, Apple's U.S. sales rose by $4.6 billion, an 80% increase from a year ago.
That increase accounted for one-fifth of all sales growth by publicly traded retailers in the U.S., according to a recent analysis of sales trends by retail sales expert David Berman. In part, that's a reflection of poor sales among most retailers. But it also highlights how Steve Jobs' technology giant is grabbing a big slice of market share in everything from smartphones to PCs.
Apple's sales are "mind-boggling," says Berman, whose quarterly DeeBee Index is closely watched by the retail industry. Berman's New York hedge fund, Durban Capital, owns shares of Apple. "People don't realize how much money has been diverted to Apple."
Sales at Apples bricks-and-mortar stores are helping fuel its U.S. performance. Sales at its retail outlets soared 90% in the quarter to $3.2 billion. The lion's share of those sales came in the U.S.
A large part of Apple's growth came from red-hot sales of its iPhone smartphones. Sales of the devices rose 113% from the previous year.
Total U.S. sales among public retailers, including auto parts dealers, Internet companies, and electronic retailers, grew by $23.2 billion in the first quarter, according to Berman's report. After Apple, the biggest chunk of U.S. sales growth came from Amazon.com and Wal-Mart Stores.
Apple is to report its fiscal third-quarter sales on Tuesday. Analysts surveyed by Thomson Reuters expect it to post net income of $5.73 a share for the quarter, up from $3.51 a year ago.
Apple's sales could be a litmus test for the extent of the soft patch that struck the economy in recent months. If demand for Apple's product wanes, it could mean the downturn is less a soft patch than a hard landing.
Sales benefitted from the expanded distribution of the iPhone to the Verizon Wireless network, which started in February. IPod sales fell 17% as more consumers shifted to iPhones.
Apple sales are rising sharply outside the U.S. as well. In the Asia-Pacific region, sales rose 151% to $4.7 billion in the quarter that ended March 26. Europe sales were up 49% to $6 billion.
Analysts expect Apple's sales to keep growing at a double-digit pace for the next few years. Morningstar analyst Joseph Beaulieu thinks Apple can achieve a 20% average revenue growth rate for the next five years, even without the introduction of new products.
If Apple has a weakness, it may be its outsize dependence on iPhone sales, which currently represent about 40% of its sales, according to Morningstar. The pop from Verizon is likely to be short-lived. If a competitor launches a superior phone, Apple could be put on the defensive. Indeed, that's exactly what Apple did to portable phone giants such as Nokia in 2007 when it launched the iPhone.