Mr Price Group executives have defended the R9.6 billion acquisition of German retailer NKD as a calculated step into the European clothing and homeware sector.
Chair Nigel Payne and chief executive Mark Blair addressed investor concerns at a recent presentation, arguing that fears of risk were overstated and that the purchase offered access to a substantial market with potential to become a major earnings contributor over time.
The executives noted that the deal, now cleared by regulators and scheduled to close at the end of March, followed thorough preparation. They referenced the group’s earlier Studio 88 purchase, which had also drawn initial scepticism yet delivered consistent results through shared values and operational strength. Acquiring a business of NKD’s scale provided built-in expertise, unlike smaller deals where management changes had sometimes been required.
Mr Price announced the acquisition in December, prompting a sharp drop in its share price amid worries that the group was straying from its proven domestic strategy. South African retailers have faced setbacks in offshore moves, most notably Woolworths’ R21 billion purchase of Australia’s David Jones in 2014, which led to losses approaching R20 billion by the time of its sale in 2023.
Payne explained that the board had studied both successes and failures elsewhere before narrowing international options to Central and Eastern Europe, where NKD operates. The group had already determined that further acquisitions in South Africa offered limited scope.
As outlined in the Mr Price Group Investor Presentation, NKD currently generates €712 million in sales and is on track to reach €1 billion (about R19.2 billion) by 2030. The transaction is forecast to add to earnings from the second year onward, with the enlarged group’s net debt to pre-IFRS 16 earnings ratio expected to stay between 1.5 and 1.75 times.
The move allows Mr Price to tap into Europe’s faster-expanding value retail segment, where discount operations continue to outpace broader apparel sales. NKD’s network of more than 2,100 stores across seven Central and Eastern European countries targets price-sensitive families with private-label apparel and homeware, fitting the group’s value-focused model.
Executives expressed confidence that the disciplined selection process and cultural fit would support long-term performance, with no major integration distractions anticipated in the near term.
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