Apple Inc. (AAPL) named the chief executive officer of the largest U.K. consumer-electronics retailer to run its stores, ending more than seven months of searching for an executive to oversee international expansion.
John Browett, 48, will start at Apple in April as senior vice president, the Cupertino, California-based company said in a statement today. The hiring marks the first outside senior-executive appointment by CEO Tim Cook. Browett replaces Ron Johnson, who left the world’s most valuable technology company last year to run JC Penney Co.
Browett, who had been CEO of Dixons Retail Plc (DXNS) since 2007, will lead Apple’s 361-store business as it builds more sites outside the U.S. Of the company’s 40 new locations this year, 30 will be abroad. Apple is using the stores to fuel an expansion in China, where outlets in Shanghai, Beijing and Hong Kong are among the company’s most trafficked locations. The company had 36,000 retail employees at the end of its last fiscal year.
“Retail is very important to Apple as a large proportion of their shipments, especially the iPad, is going through their own retail stores,” said Tim Coulling, an analyst at U.K. researcher Canalys. Browett has the necessary experience with Apple products as Dixons Retail is a “critical reseller of Apple equipment,” he said.
Booming Retail Sales
The U.K. retailer said in a separate statement that Browett would be replaced by Sebastian James, who has been with the company since 2008, most recently as group operations director.
Apple rose 0.6 percent to $455.53 at 9:30 a.m. in New York trading. Dixons fell 7.6 percent to 14.08 pence at 2:30 p.m. in London, after earlier declining as much as 13 percent for the steepest drop since June 9.
Apple, which opened its first retail outlets more than a decade ago, now generates more sales per square foot than luxury chains such as Tiffany & Co. The stores had $6.1 billion in sales in the quarter ended Dec. 31, up 59 percent from the year-earlier period.
“Our retail stores are all about customer service, and John shares that commitment like no one else we’ve met,” Cook, who succeeded Apple co-founder Steve Jobs as CEO in August, said in the statement.
Browett joined DSG International Plc, which later became Dixons, in 2007 from the U.K.’s biggest supermarket chain Tesco Plc where he was operations development director. The Cambridge graduate, who previously also worked for The Boston Consulting Group, had been touted as a possible Tesco CEO, analysts at Teather & Greenwood said at the time.
Browett, who had been at Tesco since 1998, boosted the supermarket’s online operations and helped it expand into new markets such as South Korea with groceries, consumer electronics, books and CDs.
“He was well regarded at Tesco,” Nomura food analyst Nick Coulter said, adding that Browett was perceived to be a “rising star.”
At Dixons, Browett expanded the company’s Internet business and installed in-store electronic touch screens to offer customers information about new products. He started Dixons’ so-called KnowHow service desks that provide technical after-sales support and help with computer-software installation and laptop repairs.
Apple’s so-called Genius Bar, which Johnson created, gives customers free troubleshooting help when their gadgets fail. The service is one reason Apple is consistently rated among the top companies in customer satisfaction. Apple’s retail division has helped fuel sales of iPhones, iPads, Macs and iPods, with customers lining up for hours to buy the newest devices.
Dixons shares have dropped 81 percent since Browett became CEO, including a 57 percent drop in 2011. Apple has more than doubled in that period. Still, Dixons had gained 55 percent this year until yesterday, after the retailer said profitability improved as it sold more products at full price over the Christmas period.
During Browett’s tenure at Dixons, the company secured an exclusive agreement to sell Apple’s first iPad for several weeks before rival U.K. retailers offered the tablet, spokesman Mark Webb said. The U.K.’s largest electronics chain, which runs the PC World and Currys stores, is probably the biggest seller of Apple products in the U.K. outside of Apple, he said.
“It’s not surprising that they found someone from outside the U.S., given that they’re going for quite significant growth in Europe and Asia-Pacific,” said James Cordwell, an analyst at Atlantic Equities Service in London.
Fifth Avenue, Louvre
Since Johnson announced he would be joining JC Penney in June, Apple has relied on his main deputies, including Jerry McDougal, the vice president of retail; Steve Cano, global head of store personnel; and Bob Bridger, who is in charge of choosing store locations.
In addition to its existing team, Apple has connections to the retail industry. Mickey Drexler, the chairman and CEO of J. Crew Group Inc., serves on Apple’s board.
Part of Apple’s strategy in expanding outside the U.S. will be to keep putting stores in heavily trafficked areas, even if it means paying the highest real-estate prices. Its stores on Fifth Avenue in New York, near the Louvre in Paris and on Regent Street in London attract hundreds of people who line up for introductions of new iPads or iPhones.
Store traffic reached 110 million visitors in the holiday period -- almost equivalent to the population of Mexico.
The success can have its drawbacks. Apple faced angry crowds at one of its Beijing locations after shoppers grew restless waiting for the new iPhone 4S to go on sale. Some people threw eggs at the store when it didn’t open.
Apple reported quarterly profit last week that more than doubled to $13.1 billion, boosted by record holiday sales of the iPhone, iPad and Mac. The results helped push the stock to a record.
In other management moves, Cook promoted Eddy Cue to senior vice president last year. The executive oversees iTunes and the App Store. The company also hired Todd Teresi to lead its iAd mobile-advertising network and report to Cue.
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