Best Buy Co blamed planned U.S. duties on Chinese imports and uncertainty about future customer behavior for a lower annual sales forecast, changing into the most recent company to air concerns about President Donald Trump’s trade battle with Beijing.
Best Buy’s shares, which have lost over 10% of their value up to now this month, plunged 9% to $62.80 as the consumer electronics retailer’s same-store sales scope dropped in need of analysts’ expectations even as it boosted its earnings forecast.
Sturdy July retail sales showed U.S. consumer demand so far has remained resilient to indicators of a cooling economy and an escalating trade conflict between the US and China.
Nevertheless, investors are more and more focusing on how the sector will deal with new rounds of duties with retailers, such as Macy’s and Abercrombie & Fitch warning that their earnings this year would boost.
Best Buy stated it expected its full-year same-store sales to grow 0.7% to 1.7%, narrowing the range from a prior estimate of 0.5% to 2.5% and below the 2% growth goal analysts had anticipated.
Last Friday, Trump stated tariffs would grow to 15% from 10% on $300 billion worth of imports from China, targeting a few of Best Buy’s best-selling items including smartwatches, flat-panel TVs, smartphones and video game consoles. The tariffs are set to go into effect in two stages on Sept. 1. and Dec. 15.
Newly appointed Chief Executive Officer Corie Barry stated the corporate was still figuring out if and how to raise prices on products as it works with suppliers on new sourcing methods.
Barry estimated all the intended and applied levies hit around 60% of Best Buy’s cost of products sold; however, stated the corporate was working on reducing that to 40% in 2020.