August 29, 2019 / 12:55 PM / 17 days ago

Best Buy's annual sales outlook misses estimates as tariffs loom

(Reuters) - Best Buy Co Inc 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.

A Best Buy store is pictured in Pasadena, California U.S., February 28, 2017. REUTERS/Mario Anzuoni/File Photo

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

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