Best Buy keeps full-year view, warns of higher prices from more tariffs

(Reuters) - Best Buy Co Inc on Thursday stuck to its full-year forecast due to the impact of the latest U.S. tariffs on Chinese imports and warned any new levies would increase prices for U.S. shoppers, sending its shares down as much as 5.4%

Reuters May 24, 2019 00:05:28 IST
Best Buy keeps full-year view, warns of higher prices from more tariffs

Best Buy keeps fullyear view warns of higher prices from more tariffs

(Reuters) - Best Buy Co Inc on Thursday stuck to its full-year forecast due to the impact of the latest U.S. tariffs on Chinese imports and warned any new levies would increase prices for U.S. shoppers, sending its shares down as much as 5.4%.

The consumer electronics retailer's commentary on the impact of tariffs overshadowed its better-than-expected profit in the first quarter and solid second-quarter forecast.

"The impact of tariffs at 25% (proposed to be enacted) will result in price increases and will be felt by U.S. consumers," outgoing Chief Executive Officer Huber Joly said in a conference call with analysts.

The world's largest retailer Walmart Inc last week warned that its prices would increase due to higher tariffs, while Macy's Inc said higher levies were already hurting its furniture business.

The proposed new tariffs on another $300 billion worth of goods from China includes higher levies on imports like smartphones and laptops and would likely result in higher retail prices.

"In a maturing category like smartphones, which lacks a compelling reason for consumers to upgrade in the near-term, we expect to see volumes decline in response to higher prices," said Jason Benowitz, fund manager at Roosevelt Investment Group.

STRONG EARNINGS

Gross profit margins expanded 40 basis points in the quarter to 23.7%, as high margin services, such as "Geek Squad" that provides general tech support and advice on setting up smart homes resonate with customers.

An increasing share of Best Buy's sales also comes from online, where it has been investing more to beef up delivery and its "click and collect" business that helps shoppers buy products online and collect them later from the stores.

Domestic comparable online sales rose 14.5% to $1.31 billion, making up for 15.4% of total revenue in the quarter.

Excluding one-time items, Best Buy earned $1.02 per share in the first quarter ended May 4, ahead of analysts' average estimate of 86 cents per share, according to IBES data from Refinitiv.

Best Buy forecast adjusted profit for the second quarter to be in the range of $0.95 to $1 per share, above Wall Street expectations of $0.96 per share. Its current quarter forecast for same-store sales too was largely above estimates.

(Reporting by Uday Sampath in Bengaluru; Editing by Tomasz Janowski and Arun Koyyur)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Updated Date:

TAGS:

also read

France, Germany to agree to NATO role against Islamic State - sources
| Reuters
World

France, Germany to agree to NATO role against Islamic State - sources | Reuters

By Robin Emmott and John Irish | BRUSSELS/PARIS BRUSSELS/PARIS France and Germany will agree to a U.S. plan for NATO to take a bigger role in the fight against Islamic militants at a meeting with President Donald Trump on Thursday, but insist the move is purely symbolic, four senior European diplomats said.The decision to allow the North Atlantic Treaty Organization to join the coalition against Islamic State in Syria and Iraq follows weeks of pressure on the two allies, who are wary of NATO confronting Russia in Syria and of alienating Arab countries who see NATO as pushing a pro-Western agenda."NATO as an institution will join the coalition," said one senior diplomat involved in the discussions. "The question is whether this just a symbolic gesture to the United States

China's Xi says navy should become world class
| Reuters
World

China's Xi says navy should become world class | Reuters

BEIJING Chinese President Xi Jinping on Wednesday called for greater efforts to make the country's navy a world class one, strong in operations on, below and above the surface, as it steps up its ability to project power far from its shores.China's navy has taken an increasingly prominent role in recent months, with a rising star admiral taking command, its first aircraft carrier sailing around self-ruled Taiwan and a new aircraft carrier launched last month.With President Donald Trump promising a US shipbuilding spree and unnerving Beijing with his unpredictable approach on hot button issues including Taiwan and the South and East China Seas, China is pushing to narrow the gap with the U.S. Navy.Inspecting navy headquarters, Xi said the navy should "aim for the top ranks in the world", the Defence Ministry said in a statement about his visit."Building a strong and modern navy is an important mark of a top ranking global military," the ministry paraphrased Xi as saying.