Mr Price Group shares plunge 9% following R9.6 billion European acquisition

Mr Price Group's share price slumped by over 9% at opening of the JSE on Wednesday after announcing the R9.6 billion acquisition of NKD Group GmbH (NKD), a value retailer with 2 108 stores across Central and Eastern Europe, marking the local retailer's first entry into Europe.

Headquartered in Germany, NKD sells affordable apparel and homeware and employs over 10 000 people. The group said the deal is a "transformational step in the group's long‑term growth strategy."

Mr Price Group's share price fell 9.91% to R189.23 shortly after the JSE opened Wednesday. The price is also still well down from R291.71 a year ago.

Founded 60 years ago, NKD retails private‑label products for the family. Its small‑format stores - averaging 300m² - deliver sustainable profitability through lower rentals, streamlined logistics and disciplined capital expenditure, Mr Price Group said in a statement Wednesday.

In 2024, NKD generated revenue of €685 million. This acquisition builds on Mr Price Group's vision, launched in 2021, "to become Africa's most valuable retailer". Since then, the group has invested R10bn in growth initiatives and returned R8.8bn in dividends to shareholders.

Acquisitions now contribute nearly 30% of group sales, while new concepts such as Mr Price Kids and Mr Price Cellular have delivered over R4bn in annual sales. Mr Price intends to fund the acquisition with cash and debt.

The inclusion of NKD will expand Mr Price Group's footprint to more than 5 000 stores worldwide, employing over 40 000 people and lift annual revenue to about R53bn. NKD will become the group's second‑largest trading division.

"After meeting the NKD team, it was evident that this was the right business to pursue. Like us, they are value-retailers at heart and have a very clear understanding of who their customer is and how best to serve them. They are ambitious and performance driven, which is a natural fit for the Mr Price Group," said the CEO Mark Blair.

"We have so much in common in terms of our value retailing approach and rich heritage in our respective markets. We are committed to delivering on our growth ambitions and believe this new era with Mr Price Group will create significant value," said the CEO of NKD, Alexander Schmökel, in a statement.

He will continue running the business with his management team.

TDR Capital Partners Jonathan Rosen and Linda Zhang said NKD had built up scale, innovation and momentum during their seven year partnership.

"The company's progress is a testament to its talented management team, compelling product proposition, and embedded data science capabilities that have helped turbo charge its growth," said Rosen and Zhang.

In the six months to June 30, 2025, NKD generated net sales of €344m (R6.83bn). Due to cyclical nature of the business, once off effects which related to debt finance costs and the hedging derivative valuation, saw the loss after tax amount to €10.54m. The taxed profit excluding these factors was €6.49m (about R128.68m).

Explaining the step-change in strategy, Blair said that while their strategy since 2021 was being implemented, a second phase of research to identify opportunities that would drive future growth endeavours was done.

Following this research, apparel and homeware retailing were identified as attractive investment opportunities.

"Market data indicates that the growth in the value retail market is outpacing that of the global total retail market, which aligns with the group's value focused operating model," said Blair.

"In Europe, value retailing was growing at a significantly higher rate than the total market and now accounts for 22% of the total retail market."

"(NKD) is a high performing, value-focused business with a strong track record, has a skilled and committed management team who know the local market intimately, and has ample runway for further expansion in existing markets," said Blair.

"We have been guided by our strict investment criteria which has given us clarity on our next phase of growth and enabled us to move quickly past opportunities that did not fit within our parameters," said Blair.

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