Iconic South African retailer makes R9.66 billion European bet

Mr Price has announced that it will acquire German-headquartered value retailer NKD for around €487 million (R9.66 billion), marking the group’s first expansion into Europe.

Mr Price is one of South Africa’s biggest apparel retailers, known for brands like Miladys, Sheet Street, Yuppiechef, Mr Price Home, and Studio 88.

While the group operates predominantly in South Africa, it also has operations in the rest of Africa.

The acquisition of NKD marks Mr Price’s entry into the European market, where some of its local competitors, like The Foschini Group, already have operations.

On Wednesday, 10 December, Mr Price announced that it had entered into the transaction to acquire 100% of the shares of Pegasus Group Holding, which trades as NKD.

Mr Price will make this deal through its indirect wholly owned German subsidiary. The transaction will be settled in cash and funded through a combination of existing cash resources and debt facilities.

NKD was founded 60 years ago as a cash-based European value apparel and homeware retailer headquartered in Germany.

It operates 2,108 stores across seven Central and Eastern European countries, including Germany, Austria, Italy, Croatia, Slovenia, the Czech Republic and Poland.

It executes an omni-channel strategy predominantly through physical stores, having generated net sales of €684.57 million for the financial year ended 31 December 2024.

Mr Price explained that NKD has a clearly differentiated value positioning, targeting quality and price-conscious customers, with a predominantly private label range offering that serves the whole family and carries minimal fashion risk.

This is similar to Mr Price’s positioning in its current markets, with the retailer operating as a cash-based, omni-channel business focused on providing fashion and homeware offerings.

However, unlike Mr Price, NKD operates smaller-format stores with an average store size of 300 m². 

This model is enabled by reduced rental costs in smaller town locations and a lean approach to capital expenditure, labour and logistics.

Betting on Europe

Mr Price told shareholders that NKD’s management team consists of highly seasoned retailers with a strong track record and a business culture that aligns with the South African retailer.

“The business has identified significant growth opportunities across the seven existing markets in which it operates and has appetite to pursue long-term sustainable growth across the continent,” Mr Price said.

The retailer explained that this acquisition forms part of its new strategy launched in May 2021, guided by a new vision of becoming the most valuable retailer in Africa.

Mr Price’s research identified apparel and homeware value retailing as attractive investment opportunities for the group. 

The retailer said 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. 

It found that, in Europe, value retailing is growing at a significantly higher rate than the total market and now accounts for around 22% of the total retail market.

Therefore, NKD represents an opportunity that is strategically aligned with the Mr Price Group.

Based on NKD’s latest annual financial information for the year ended 31 December 2024, NKD’s inclusion would increase Mr Price’s latest annual revenue to approximately R53 billion, store numbers to more than 5,000 and employees to over 40,000.

“We have spent a considerable amount of time researching markets and assessing opportunities,” Mr Price CEO Mark Blair said. 

“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.”

“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 to best serve them.”