Mr Price's nearly R10bn European acquisition sees share price plunge 13%

Mr Price Group's share price plunged by over 13% on the JSE Wednesday after it announced the R9.6 billion acquisition of a store chain in Eastern Europe, marking the biggest cash value retailer in South Africa's entry into the European market.

The group plans to acquire NKD Group GmbH (NKD), a leading value retailer with 2 108 stores across Central and Eastern Europe, a move that brings Mr Price's total store count to over 5,000.

NKD would be acquired from funds managed by TDR Capital, based in Germany. NKD sells affordable apparel and homeware and employs over 10 000 people. Mr Price said the deal is a "transformational step in the group's long‑term growth strategy."

Mr Price Group's share price fell 13.46% to R181.76 in the afternoon. The price is also still well down from R291.71 a year ago.

Smalltalkdaily Research market analyst Anthony Clark said the problem, from his point of view, was that every single large South African retail group that had attempted to export their expertise to other foreign markets over decades, has failed, with The Spar Group's sale of its Poland and Switzerland businesses just the most recent example of this trend.

On the "X" platform, The Finance Ghost (@FinanceGhost) wrote: "Mr Price decided that a nice clean strategy and a focus on SA just felt too much like a good time. Inspired by wonderful success stories like Woolworths and The Foschini Group, they've decided to give an international clothing acquisition a go. Thanks for nothing."

Also on "X" Christina (@cjpraat) wrote: "Mr Price: The total return over 5 years is barely 3% before dividends. The gains from the GNU and two pot system have now mostly vanished."

Mr Price Group CEO Mark Blair said NKD was founded 60 years ago and had built a strong value proposition through quality, private‑label products for the family. Its small‑format stores - averaging 300m² - delivered profitability through lower rentals, streamlined logistics and disciplined capital expenditure. In 2024, NKD generated revenue of €685 million.

Blair said this acquisition builds on Mr Price Group's vision, launched in 2021, to become "Africa's most valuable retailer".Since then, the group had invested R10bn in growth initiatives and returned R8.8bn in dividends to shareholders. Strategic acquisitions now contributed nearly 30% of group sales, while new concepts such as Mr Price Kids and Mr Price Cellular delivered over R4bn in annual sales. Mr Price intends to fund the acquisition with a combination of cash and debt.

NKD will become the group's second‑largest trading division. The transaction is expected to close in the second quarter of 2026, subject to regulatory approvals.

"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 for the Mr Price Group," said Blair.

"We are delighted to be joining forces with the Mr Price Group. 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 NKD CEO 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.

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

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

BUSINESS REPORT