Mr Price takes on R7 billion in debt amid European expansion

Mr Price’s 2026 results revealed that the retailer crossed the R6 billion operating profit mark for the first time, despite lacklustre comparable store sales growth.

However, amid its controversial acquisition of the Pegasus Group, which holds German retailer NKD, Mr Price took on R7 billion in term loans, introducing structural debt to the company’s balance sheet for the first time in years.

Mr Price released its results for the year to 28 March 2026 on Friday, 5 June, which revealed a mixed performance.

The group’s retail sales reached R41.1 billion, up 4.3% from the prior year, while its comparable store sales grew by a more modest 1.1%. 

Mr Price’s other revenue decreased 1.9% to R1.3 billion, which the group attributed to lower interest rates, which had impacted debtors’ interest.

This saw Mr Price’s total revenue reach R42.65 billion, up 4.2% from the 2025 financial year.

The retailer recorded a net profit of R3.85 billion for the period, reflecting a modest 1.6% increase from 2025. Its operating profit saw stronger growth of 4.3% to reach R6 billion for the first time.

Its basic earnings per share rose by 2.3% to 1,449.5 cents, while headline earnings per share increased by 2.1% to 1,453.9 cents. The group’s earnings were impacted by its Pegasus acquisition.

From a segmental perspective, Mr Price’s largest division, Apparel, saw retail sales up 4.2% to R32.76 billion. Its Home segment grew retail sales by 3.8% to R6.93 billion.

Mr Price’s Telecoms segment was a standout performer, having grown retail sales by 10.3% to R1.46 billion.

The group also expanded its footprint significantly over the year, with its network now consisting of 3,182 corporate-owned stores. This is nearly double the 1,721 stores it had just five years ago.

The group’s cash generation was also strong in the period, with cash reserves now sitting at a healthy R11.67 billion, aided by its highly cash-generative operations and its new debt facilities.

R9.39 billion acquisition and R7 billion loans

Mr Price fulfilled all regulatory conditions related to its controversial acquisition of the NKD Group in 2026, ultimately paying R9.39 billion for the European retailer.

This acquisition has been highly controversial since it was announced, with major shareholders raising concerns about the cost and viability of international expansion.

However, Mr Price stuck to its guns and completed the acquisition, which became effective after the end of its 2026 financial year.

NKD is a European value apparel and homeware retailer operating more than 2,100 stores across seven Central and Eastern European countries.

In its 2026 results, Mr Price explained that this acquisition “represents an opportunity that is strategically aligned” with its business.

The total purchase consideration of R9.39 billion was paid on 31 March 2026, and funded through a combination of existing cash resources and borrowing facilities. Mr Price took on R7 billion in term loans over the period.

This introduced structural debt to Mr Price’s balance sheet for the first time in years, with the retailer historically having prided itself on maintaining a balance sheet entirely free of financing debt.

The R7 billion debt facilities the group has now taken on have a contractual repayment term of two years, which may be extended by a further two years.

In its 2026 results, Mr Price said that, with the introduction of structural debt, it will prioritise focusing on its balance sheet and treasury management. 

This comes as the group is also planning significant capital expenditure (capex) for the 2027 financial year.

In South Africa, the group forecasts capex of R1.1 billion, which will be used for around 180 new stores, existing store revamps, as well as supply chain and technology investments.

In Europe, NKD’s capex is forecast to be €24 million (R455.23 million), to be used on expanding its footprint with 150 new stores.