The executive chairman of JD Sports says Brexit has been “considerably worse” than expected so far, and that the company is considering setting up a distribution centre in the EU to avoid new tariffs.
Peter Cowgill told BBC Radio that new red-tape and delays related to shipping products to the EU since the UK left the block last month have resulted in “double-digit millions” in extra costs.
A ‘rule of origin’ clause in the Brexit Deal states that goods made - or containing components made - from outside the UK or EU and resold by UK companies now face VAT and import duties when sold to the EU.
Cowgill said the UK doesn’t have a truly free trade arrangement with the EU because goods JD Sports sources from the Far East which are then sold from the UK to the EU now incur tariffs.
JD Sports eyes EU distribution centre
“I actually think it was not properly thought out. All the spin that was put on it about being free trade and free movement has not been the reality,” he said. “The new system and red tape just slows down efficiency. The freedom of movement and obstacles are quite difficult at the moment. I don’t see that regulatory paperwork easing much in the short term.”
Cowgill said JD Sports, which is the UK’s biggest sportswear retailer, is now considering setting up a distribution centre in the EU to avoid these extra costs. The move “would make a lot of economic sense” and could create around 1,000 jobs, he said.
The retailer’s existing warehouse in Rochdale would not close, but the move could see “the transfer of a number of jobs into Europe”.
Cowgill also warned that the UK needed a complete overhaul of business rates and rents to save the high street.
Image: JD Sports/Silverburn