(Reuters) – Best Buy Co Inc (BBY.N) forecast annual same-store sales below analysts’ estimates on Thursday, citing new U.S. tariffs set to be imposed on Chinese imports, such as phones, video game consoles and other electronics.
FILE PHOTO: People wait in line to shop at Best Buy during a sales event on Thanksgiving day in Westbury, New York, U.S., November 22, 2018. REUTERS/Shannon Stapleton
Best Buy’s shares, which have lost about 10% of their value so far this month, fell 5.4% to $65.30 in pre-market trade as consumer electronics retailer also flagged concerns over uncertainty related consumer buying behavior in the second half of the year.
The company narrowed its full-year same-store sales forecast to a rise of 0.7% to 1.7%, from 0.5% to 2.5%. Analysts had expected a 2% increase.
President Donald Trump last week said U.S. tariffs on $250 billion worth of Chinese imports would rise to 30% from the current 25% beginning Oct. 1.
While Best Buy has said those tariffs only affect about 7% of it’s cost of goods sold, a planned 15% levy on a further $300 billion worth of Chinese goods, would hit most of Best Buy’s best selling products, such as cell phones and laptops.
Trump announced the increase to 15% from 10% last Friday, with the first tranche on over $125 billion of targeted goods including smart watches, Bluetooth headphones and flat panel TVs, set to go into effect on Sept. 1.
Tariffs on the remainder of the $300 billion list that includes cellphones, laptops, toys and clothing will kick in on Dec. 15, according to the U.S. Trade Representative’s Office.
Best Buy’s overall same-store sales rose 1.6% in the second quarter ended Aug. 3, missing analysts estimates of a 2.15% increase, according to IBES data from Refinitiv.
Revenue rose to $9.54 billion from $9.38 billion, a touch below expectations of $9.56 billion.
Excluding one-time items, the company earned $1.08 per share in the second quarter, beating analysts’ estimates of 99 cents per share.
Reporting by Uday Sampath in Bengaluru; Editing by Tomasz Janowski