A drop in the corporate tax rate to 21% from 35% will give retailers a free cash boost as they fight for survival in the Amazon era.
A drop in the corporate tax rate to 21% from 35% will give retailers a free cash boost as they fight for survival in the Amazon era.

In its early stages, the Republican tax plan didn’t bode well for retailers. Speaker of the House Paul Ryan wanted to include a border-adjusted tax on imports that would have been disastrous for an industry that sources much of its merchandise overseas.

That didn’t make it into the final plan. Instead of coal for Christmas, retailers got a war chest. Their corporate tax rate of 35% will drop to 21%, handing them a free cash flow boost as they fight for survival in the Amazon era.

“It’s like manna from heaven,” says Anthony Chukumba, a retail analyst at Loop Capital. “It couldn’t have come at a better time.”

Created with Highcharts 6.0.4FlushF2018 Incremental free cash flow from taxcutsF2018 Incremental free cash flow from tax cutsSource: Loop Capital Markets

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