Apple sales slump: iPhone no longer driving sales as demand drops 20 percent, says Target

Apple better have something surprising in store for the iPhone 7, if not for the consumer's sake, then for its retail partners.


Apple is expected to release its next iPhone in September this year.

Image: Andrew Hoyle/CNET

US retailer Target said falling sales of Apple products were partly to blame for the double-digit dip in its electronics revenues last quarter.

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The retailer this week reported a rough second quarter, singling out its electronics division for causing a "significant drag" on its revenues, equal to 70 basis points of a 1.1 percent decline in overall revenues, compared to the same period in 2015.

Target CEO Brian Cornell said dwindling demand for Apple products had a "significant" impact on electronics earnings, with a 20 percent decline in Apple sales being responsible for one-third of the slowdown in its electronics division.

Target's figures should come as no surprise, given Apple's across the board decline in hardware sales for the second quarter. Compared to last year, iPhone sales were down 16 percent, iPads were down 19 percent, and Macs were down 12 percent.

The numbers highlight how much hangs on the iPhone 7, not just for Apple, but for retailers too. It also raises questions about the wisdom of Apple's rumoured decision to be holding off on major upgrades to the iPhone until 2017.

Cornell said Target hopes to reverse this quarter's trend in the latter part of the year. While he didn't mention a release date for the iPhone, Apple has historically started selling new devices in September.

A minor upgrade, or at least one that doesn't boast obvious innovations, might not be good news for Target and it's something the retailer's execs have raised with Apple.

Explaining the decline in current iPhone sales, Cornell said customers were coming in and "looking for the newness and the innovation".

"We are putting together plans with Apple and our merchandising teams to make sure we are ready to take advantage of that in the back half of the year," said Cornell.


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"We are ready to capitalize on their new innovation that they will be bringing to market. But again... we have to improve electronic performance."

The latest rumours indicate that Apple will release the new iPhone on September 16. While the next iPhone will look basically the same as the current version, Apple is reportedly introducing a new home button with haptic feedback, much like the MacBook and the Apple Watch. Apple may also be introducing dual cameras and, for the first time, two speakers. Perhaps the most talked about rumour, however, is that it plans to ditch the 3.5mm headphone jack.



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