[ad_1]
Some of Best Buy's most popular products, such as TVs, smart watches and headphones imported from China, were just a few days old at a 15% tariff, with the company's stock falling 9% Thursday morning.
On December 15, computer products, mobile phones and game consoles will have a 15% fee. The Trump administration announced earlier this month that some tariffs would be delayed in order to keep prices low for consumers during the holiday season.
However, executives were determined to put investors at ease, pointing out that they had taken imminent tariffs into account in their forecast for the year, while raising their profit forecasts. He also said it had been announced in the Trump Administration's announcement six days ago to raise the tariff rate to 30% instead of 25% on 250 billion dollars of Chinese products.
Nevertheless, when Best Buy examines the cost of products sold, including labor, materials and overhead, about 60% currently go to China.
"But we think that tariffs, because of the bargaining power, because of the mitigation strategies that we are putting in place, are very affecting that part," she said.
She explained that due to pricing uncertainties, many Best Buy suppliers are delocalising manufacturing. As a result, she estimated that the cost of goods in China could fall to 40% next year.
Charlie O 'Shea, a retail sector analyst at Moody's, said that since Best Buy had increased its forecast, this indicated that the company was ready to face the future .
"It tells me that whatever the scenario, they have a way to manage it," he said.
Another mitigation tactic that the company can use is product sourcing before tariffs actually affect rates.
"They have probably already made a lot of pre-purchases, so they have already already bought a lot of the Chinese products they need in the distribution network," O. Shea said.
In addition, although TV rates are expected to come into effect on September 1, Best Buy said the bulk of its business was large screen televisions originating in Mexico.
But Barry also pointed out that the environment presented a level of uncertainty that the company had never seen before.
"It takes a bit of art and science to estimate that and we have no precedent for the amount of moving parts that we currently have in place," Corie said. "We try to take into account a few things here," including what goods are on the list, when they will be put into service and at what rates, she said.
Best Buy shares have increased 18% since the beginning of the year, bringing its market capitalization to approximately $ 18 billion.
[ad_2]
Source link