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StockBeat - Chipotle Slides as CFO Warns Trump Tariffs Could Eat Into Growth

Stock MarketsJun 03, 2019 01:19PM ET
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© Reuters.

Investing.com - Shares of Chipotle Mexican Grill fell on Monday on fears proposed tariffs on produce from Mexico could ramp up costs for the the fast-food chain by millions of dollars and eat into margins.

If the tariffs on all Mexican exports suggested by Trump are enacted, the restaurant chain's costs could go up by about $15 million this year and reduce its margins by 20-30 basis points, Chief Financial Officer Jack Hartung said in an e-mailed statement to Reuters.

Chipotle (NYSE:CMG) shares were down 2.45%.

Trump said last week the U.S. will impose, starting June 10, a 5% tariff on all imported goods from Mexico that would "gradually increase until the illegal immigration problem is remedied."

As well as the proposed tariffs, higher labor costs and a rise in avocado prices following a poor harvest in Mexico are also threatening to send costs higher.

Mexico, the largest supplier of agricultural produce to the United States, exported more than $8 billion worth of avocados and other vegetables to the U.S. last year.

Still, Chipotle added it could offset the increased costs by charging 5 cents more per burrito.

The shares were off 4.14% in May and have fallen 11.6% since hitting a 52-week high of $727 on May 20. Still, they are up 49% on the year.

StockBeat - Chipotle Slides as CFO Warns Trump Tariffs Could Eat Into Growth
 

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Kenny Yap
Kenny Yap Jun 03, 2019 3:49PM ET
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These is how tarff man win his election not thru his negiotiation but by bullying skill . Same happening during election time by bullying his opponent(Even d Replublican candidates were victims)
Matt Hellwege
Matt Hellwege Jun 03, 2019 2:53PM ET
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It takes 15 year to get a yield out of an avocado tree. That's a long wait. I rather see that than all of these soy, and corn fields. Never mind that, have you seen the size of avocados in Hawaii?
ergis ziu
ergis ziu Jun 03, 2019 1:35PM ET
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How about these CEOs & CFOs take a pay cut, which is millions of dollars of salary that they should not have in the first place. Greed is what’s destroying us, not tariffs
bomz bomzov
bomz bomzov Jun 03, 2019 1:35PM ET
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if you want socialism go to North Korea.
Dar Smith
Dar Smith Jun 03, 2019 1:35PM ET
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He's not talking about a.move to socialism. We have what's called an oligarchy, not democracy.
Bruce Evans
Bruce Evans Jun 03, 2019 1:23PM ET
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We're better off without the Mexicans or Chipotle.
Jeff Boulter
JeffBoulter Jun 03, 2019 1:18PM ET
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chipotle can't use trump. Their constant battle with e coli is what hurts them
vinu patel
vinu patel Jun 03, 2019 1:18PM ET
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Better for trades who wish to short sell this stock before it goes too much down.
Titus Polichnia
Titus Polichnia Jun 03, 2019 1:06PM ET
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alot of businesses that have bad quarters will use trump as the scapegoat, rather than be creative and create more jobs and grow their own avocados
vinu patel
vinu patel Jun 03, 2019 1:06PM ET
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Very good positive thinking. But you know every business owners may not have that broad thinking.
Ji Go
Ji Go Jun 03, 2019 1:00PM ET
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What a cop out? They were having a bad quarter and just want to point fingers at someone else. You telling me US produce is that much more expensive? Lettuce, tomatos, and avocados....30% haircut, really?!
Mojo Snake
Mojo Snake Jun 03, 2019 12:59PM ET
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Who cares, they are overpriced anyway.
 
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