President Trump’s latest volley in a trade war with China will raise supply costs for AutoZone significantly, and the retailer plans to cope by charging higher prices, its chief executive officer said Tuesday.
The White House finalized an additional 10 percent tariff on $200 billion worth of Chinese goods on Monday, bringing the total amount of impacted products to $250 billion. Trump also threatened to add levies on an additional $267 billion in imports, which would cover nearly all shipments from China; his administration has previously imposed double-digit tariffs on steel and aluminum.
While CEO William Rhodes III conceded that the auto parts retailer hasn’t been hurt significantly by the tariffs imposed before this week, the new levies will be “more significant,” he said.
While “we expect to be able to manage our way through any changes,” Rhodes told investors, if the tariffs remain for an extended period of time, there could be significant inflation.
“We’re not scared of marginal inflation,” he added. “What we don’t want to see is shocks that shock the consumer.”
Sales at the Memphis-based retail chain grew 1.3 percent to $3.5 billion for the three months through Aug. 25, while profits dropped 7.7 percent to $400 million, AutoZone said Tuesday. Rhodes attributed the decline to adjustments in vendor relationships — several of which “did not go as planned,” leading to sales shortfalls — and a mild summer on the West Coast.
