WMT Walmart Inc

As an industry that pays one of the highest average corporate-tax rates, retailers have been one of the largest beneficiaries of the new tax legislation, which lowered the rate to 21%.

Retailers have mostly U.S.-based operations and little manufacturing or research and development, so they don't usually benefit from deductions on those activities.

The tax cut could have significant effects on an industry spending heavily to fight Amazon.com and adapt to shifting consumer habits. Traditional retailers have generally paid higher taxes than online retailers like Amazon.

Most retailers pushed hard in favor of the Republican tax plan since beating back a border-adjusted tax idea included in early proposals that would have imposed taxes on imported goods. The majority of retailers sell large amounts of imported products, so any such tax could have eaten away at earnings and resulted in higher costs that retailers said would have to be passed to consumers.

[DOWNLOAD THE E-BOOK: "The New World of Taxes: 2019"]

Since the tax overhaul passed, retailers including Walmart, Home Depot and Lowe's have announced investments in wages, parental-leave benefits and one-time bonuses for hourly workers, saying the timing of some of those efforts are linked to the new tax law. Both Lowe's and Home Depot said the new tax code would eat into profits at first, related to the companies' plans to repatriate offshore earnings, but it added to profits in the following fiscal year.

Sarah Nassauer

Write to sarah.nassauer@wsj.com

(END) Dow Jones Newswires

February 15, 2019 08:14 ET (13:14 GMT)

Copyright (c) 2019 Dow Jones & Company, Inc.