Brexit Red Tape Forces Retailer JD Sports to Open EU Warehouse

JD Sports Fashion Plc will open a new distribution warehouse in the European Union to cope with the worse-than-expected impact of Brexit red tape and tariff costs.

The U.K. sportswear chain is looking at sites in various countries, including the Netherlands and Germany, to meet growing online demand from European consumers, according to a spokesman for the company.

The facility will employ about 1,000 people and, before Brexit, would likely have been located in the U.K.

JD Sports already has a warehouse in Belgium but it’s relatively small and primarily used to supply its store network on the continent. The main distribution hub is in Rochdale, England, and it’s this center which is currently used for online orders from European customers.

However, new trade rules since the U.K. left the EU at the end of 2020 mean JD Sports is now facing extra costs in the “double digit millions” to meet demand from its European customers.

It sources many of its sneakers and sports clothing from Asia, but under new rules of origin, tariffs will apply if these products are brought into the U.K. and then shipped to the EU.

“They said we have a free-trade agreement but that’s really not the case,” Peter Cowgill, executive chairman of JD Sports, told BBC Radio 4. “With the tariffs that apply, it would make a lot of economic sense to have a distribution center in Europe.”

No current jobs at its U.K. site will be lost, but Cowgill said locating on the continent means the “transfer” of new job creation. JD Sports hadn’t planned to open a new warehouse in the short term but the impact of Brexit has hastened its plans.

“It’s considerably worse than predicted,” said Cowgill.

©2021 Bloomberg L.P.

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