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