Here's Why Apple Is Suddenly Laying Off Employees From Its Retail Stores

John BrowettJohn Browett, Apple’s new SVP of retail

Photo: Dixons Retail

Several publications, including this one, have reported that Apple has mysteriously been laying off retail employees and cutting hours in recent weeks. Now, we may finally have an explanation as to why.ifoAppleStore, a blog that tracks Apple’s retail operations, reports hearing from sources that the company’s new retail chief John Browett is pushing for employee cutbacks to make retail operations leaner and boost the company’s profit margins.

Browett, who took over as Apple’s SVP of retail in the beginning of this year, has reportedly told Apple staff that he thinks the stores are “too bloated,” and thinks the retail operations need to be “leaner.”

ifoAppleStore reports that Browett has ordered Apple’s retail stores to take several steps towards this goal, including laying off employees who can’t work part-time, reducing or eliminating overtime and putting a stop to promotions.

If true, this emphasis on store profitability is surprising given that Apple’s stores are among the most profitable in the world, with each employee generating about $420,000 in sales each year, or about 10 times the amount that employees at Best Buy do. However, as ifoAppleStore points out, retail profit margins (22% in Q2) are down slightly from 2011.

Browett, for his part, does have a track record of pushing for profits. Before coming to Apple, he headed up Dixons electronic chain in the U.K., where he worked to stabilise the company’s profits, which had been on the decline due to the oncoming recession.

The timing of these latest moves is questionable though. In fact, according to ifoAppleStore, some longtime retail employees at Apple have tried to push back, noting that we’re about to hit back-to-school season and the iPhone 5 is due to come out soon, both of which will likely boost foot traffic to stores. This could be problematic if the staff is suddenly reduced.

We reached out to Apple for comment and will update this post when we hear back.

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