{"id":865947,"date":"2026-07-09T16:00:00","date_gmt":"2026-07-09T14:00:00","guid":{"rendered":"https:\/\/businesstech.co.za\/news\/?p=865947"},"modified":"2026-07-09T15:38:27","modified_gmt":"2026-07-09T13:38:27","slug":"hope-for-mr-price-after-controversial-deal-to-buy-european-retailer-for-r9-6-billion","status":"publish","type":"post","link":"https:\/\/businesstech.co.za\/news\/business\/865947\/hope-for-mr-price-after-controversial-deal-to-buy-european-retailer-for-r9-6-billion\/","title":{"rendered":"Hope for Mr Price after controversial deal to buy European retailer for R9.6 billion"},"content":{"rendered":"\n

While Mr Price’s acquisition of European retailer NKD drew widespread shareholder backlash, there is optimism about the deal. <\/p>\n\n\n\n

The deal was valued at \u20ac487.00 million (roughly R9.6 billion in December when the deal was announced) and was funded by a combination of cash and debt.<\/p>\n\n\n\n

NKD has over 2,000 stores in several European countries, including Germany, Austria and Italy. The company generated net sales of \u20ac684.57 million in 2024.<\/p>\n\n\n\n

However, the market did not respond positively to the deal, with R6 billion wiped off Mr Price\u2019s market cap on the first day after the announcement. <\/p>\n\n\n\n

Analysts from 36One Asset Management and Benguela Fund Managers said that NKD’s financials were incredibly weak.<\/p>\n\n\n\n

This includes profit margins of around 1% to 2%, which is far lower than Mr Price\u2019s typical 9% to 14%. Mr Price’s return on equity (ROE) of 27% was also far higher than NKD\u2019s approximately 13% at the time. <\/p>\n\n\n\n

The deal also added a massive amount of debt to Mr Price’s balance sheet, with R7 billion in interest-bearing loans following the acquisition.<\/p>\n\n\n\n

Several local retailers have also attempted expansion in international markets, with incredibly limited success, such as Woolworths’ acquisition of David Jones for R21 billion in 2014. <\/p>\n\n\n\n

Despite the concerns over Mr Price’s acquisition of NKD, Brendan Capstick from Nedbank Private Wealth actually chose Mr Price as his stock pick when speaking with Business Day TV<\/a>. <\/p>\n\n\n\n

Capstick said that Nedbank Private Wealth believes that the deal will be positive on a read-through basis. <\/p>\n\n\n\n

He also alluded to the market fears over current headwinds facing South Africa, which include high inflation and heightened interest rates following the United States war with Iran. <\/p>\n\n\n\n

He noted that South Africa has recently seen a decrease in petrol and diesel prices<\/a>. However, his comments came before the resumption of attacks between the two nations. <\/p>\n\n\n\n

Financial results are strong<\/h2>\n\n\n
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Capstick added that Mr Price’s latest financials were solid, with the company showing attractive valuation metrics. <\/p>\n\n\n\n

For the 52 weeks to 28 March 2026, Mr Price Group reported total revenue of R42.7 billion, up 4.2% from the prior year. <\/p>\n\n\n\n

When using normalised figures, which exclude those costs, basic, headline and diluted headline earnings per share increased by 8.0%, 7.7% and 8.0%, respectively.<\/p>\n\n\n\n

On a statutory basis, basic, headline and diluted headline earnings per share of 1,449.5 cents, 1,453.9 cents and 1,411.8 cents, increased by 2.3%, 2.1% and 2.4%, respectively.<\/p>\n\n\n\n

The group still declared a final dividend of 592.8 cents per share, maintaining a pay-out ratio of 63%.<\/p>\n\n\n\n

Capstick said these results were quite good, with diluted HEPS showing strong growth of 8%. He believes that the management is doing well in driving earnings. <\/p>\n\n\n\n

Looking at the stock’s valuation, he noted that Mr Price was trading on a forward price-to-earnings ratio of around 11 and offering a nearly 6% dividend yield, which is strong for a retailer. <\/p>\n\n\n\n

The stock is also trading ex-dividend, making it a good entry point for longer-term investors into Mr Price. <\/p>\n\n\n\n

The Ex-dividend deadline is the date before which you must own a stock to receive its dividend payment. Stock prices typically decline after this date as cash leaves the business. <\/p>\n\n\n

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\n","protected":false},"excerpt":{"rendered":"

While the acquisition of NKD drew the ire of some Mr Price shareholders, the stock is still showing signs of life.<\/p>\n","protected":false},"author":95,"featured_media":856793,"comment_status":"open","ping_status":"closed","sticky":true,"template":"","format":"standard","meta":{"_sma_x_autopost_status":"posted","_sma_x_autopost_error":"","_sma_x_post_id":"2075218680791568496","_sma_x_attempts":1,"footnotes":""},"categories":[9872],"tags":[2910,7067,24355],"class_list":["post-865947","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business","tag-mr-price","tag-nedbank-private-wealth","tag-nkd"],"_links":{"self":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/865947","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/users\/95"}],"replies":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/comments?post=865947"}],"version-history":[{"count":3,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/865947\/revisions"}],"predecessor-version":[{"id":865962,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/posts\/865947\/revisions\/865962"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media\/856793"}],"wp:attachment":[{"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/media?parent=865947"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/categories?post=865947"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/businesstech.co.za\/news\/wp-json\/wp\/v2\/tags?post=865947"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}