Best Buy’s sales forecast falls short as tariffs loom

NEW YORK, Aug 29, (RTRS): Best Buy Co Inc (BBY.N) blamed planned US tariffs on Chinese imports and uncertainty about future consumer behavior for a lower annual sales forecast, becoming the latest company to air concerns about President Donald Trumpís trade war with Beijing.

Strong July retail sales showed US consumer demand so far has remained resilient to signs of a cooling economy and an escalating trade war between Washington and Beijing.

However, investors are increasingly focusing on how the sector will cope with new rounds of tariffs with retailers, such as Macyís Inc (M.N) and Abercrombie & Fitch Co (ANF.N) warning that their profits this year would take a hit.

Best Buy said it expected its full-year same-store sales to rise 0.7% to 1.7%, narrowing the range from a prior forecast of 0.5% to 2.5% and below the 2% growth target analysts had expected.

Last Friday, Trump said tariffs would rise to 15% from 10% on $300 billion worth of Chinese imports, targeting some of Best Buyís best selling goods including smart watches, flat panel TVs, mobile phones and video game consoles. The levies are set to go into effect in two phases on Sept. 1. and Dec 15.

Newly appointed Chief Executive Office Corie Barry said the company was still working out if and how to raise prices on products as it works with suppliers on new sourcing strategies.

It’s the most difficult place for us to make projections... We donít exactly have a precedent for the quantity of moving pieces that we have in place right now,î Barry told analysts.

Barry estimated all the proposed and implemented tariffs affected about 60% of Best Buyís cost of goods sold but said the company was working on lowering that to 40% next year.

Best Buyís 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.

Earnings per share excluding one-off items came at $1.08, beating analystsí estimates of 99 cents per share and prompted Best Buy to raise its annual adjusted profit forecast to $5.60 to $5.75 per share from previous $5.45 to $5.65$.