Retailers to get tax relief for store remodels/improvements?
Two bills passed by a key House committee would help retailers save on store remodeling and improvement costs upfront.
The bills, passed by the House of Representatives’ Ways and Means Committee on Thursday, would help retailers remodel their stores by make tax incentives for remodeling and new capital improvements permanent.
The National Retail Federation called on the House to quickly pass the two pieces of legislation that would make the tax provisions permanent.
“Retailers update or remodel their stores every five to seven years to remain competitive, but the high after-tax cost of making these investments often delays these much-needed updates,” NRF senior VP David French. “These bills would provide important investment incentives that would spur our sluggish economy.” –
The first of the two measures, the “Restaurant and Retail Jobs and Growth Act,” would make permanent a measure permitting “bonus depreciation,” which allows retailers to write off the cost of remodeling or make improvements to their stores over 15 years instead of the standard 39-year period for buildings.
The second bill would make permanent a provision that allows businesses that make capital investments, including leasehold improvements, to deduct half the cost immediately and then depreciate the remainder over the appropriate period. In addition, it would expand the provision to include owned stores rather than only leased stores.
Both provisions were in place on a temporary basis until they expired at the end of 2014, but would be renewed retroactively under the legislation and become a permanent part of tax law. If approved by the full House and Senate, the tax provisions would be renewed retroactively and become a permanent part of the tax law.
The two measures are important, the NRF said, because they make remodeling more affordable by providing upfront a greater portion of the tax benefits offered to businesses for making renovations.
As an example, under current law, if a store spent $500,000 on expanding its showroom, it would only be allowed to deduct less than $13,000 of the expansion costs in the first year, with depreciation spread out over nearly four decades.
However, under the two proposed bills, the same store would be allowed to deduct $250,000 from its tax bill the first year and then spread out the remaining $250,000 over the next 14 years, freeing up more money early on for further investment.
The Home Depot builds physical omnichannel infrastructure
The Home Depot is building physical infrastructure to support online operations. The home improvement giant is officially opening the third of three facilities designed to support its online business, IT transformation and overall interconnected retail strategy.
The new 1.6 million-sq.-ft. facility is located in Troy Township, Ohioand is expected to eventually employ 500 workers. Home Depot is opening the center as online sales continue to grow and currently account for 5% of total revenues.
The company opened two other direct fulfillment centers in 2014; one inLocust Grove, Georgia in the metro Atlanta area, and another inPerris, California.These new facilities enable the company to deliver 90% of Home Depot online orders of regionally stocked parcel items in two business days or less, using ground delivery service.
Home Depot also announced that in October it will officially open its new Marietta Technology Center, a 200,000-sq.-ft. office complex inMarietta, Georgiafor approximately 1,000 IT associates, with the expectation of eventually adding an additional 500 IT jobs at this location. Since 2007, the company has enhanced its IT capabilities in conjunction with its supply chain and merchandising transformations.
And in November, the company will open a third online customer care operation inTempe, Arizona., employing 800 workers. This will be the third online customer service operation dedicated to the online business. In 2012, the company opened two other online customer service centers; one inKennesaw, Georgia, anAtlantasuburb, and another inOgden, Utah, just outsideSalt Lake City.
"These investments are advancing our interconnected retail strategy, which allows our customers to engage with Home Depot however they choose," saidCraig Menear, chairman, CEO and president of The Home Depot. "We're also pleased to contribute to the economic growth of these communities."
Home Depot is not the only major retail chain beefing up fulfillment support for omnichannel retail. Wal-Mart is spending $200 million to build a new distribution center in Polk County, Florida that will be dedicated to fulfilling e-commerce orders. The center will consist of two centers totaling more than 2 million-sq.-ft.
Havertys names Nexus exec to head up supply chain
Home furnishings retailer Havertys reported that Gary Niedermeyer, assistant VP, supply chain, will retire at the end of 2015. He will be succeeded by Abir Thakurta, who will report to Richard D. Gallagher, executive VP, merchandising.
Abir Thakurta joins Havertys with considerable experience in cross-industry supply chain strategy and operational design. He was most recently with GT Nexus as a director in their supply chain consulting practice where he implemented performance improvement programs with retailers worldwide.
"We believe Abir’s knowledge and experience in helping retailers obtain end-to-end visibility in an increasingly complex and global supply chain will be a valuable asset to Havertys. His experience using the latest technology and best practices to drive profitable operations while managing business risk will make him an excellent fit for our team,” said Gallagher.
Havertys, based in Atlanta, operates123 stores.