The recent acquisition of NKD Group has paid off handsomely for Mr Price as the German retailer helped boost the South African group’s sales in the first quarter.Mr Price’s group retail sales for the 13 weeks ended June 27 were up 45.3% at R13.1bn, it said in a voluntary trading update on Thursday. Other income grew 12.5% to R352m.Excluding NKD, retail sales in Africa increased 3.2% to R9.3bn, exceeding retail sales growth per the Retailers’ Liaison Committee (RLC) of 0.8%, it said.The group said NKD sales growth outperformed total market and value segment growth in Germany.Mr Price acquired Pegasus Group Holding, which trades as the retail business of NKD Group, at the end of March. Business Day reported previously that Mr Price executives, including chair Nigel Payne and CEO Mark Blair, have been at pains to sell the business case for its R9.6bn foray into Europe through the acquisition of cash-based apparel and homeware retailer NKD, which gives the group access to the vast European clothing and homeware market.Current economic conditions continue to reinforce the resilience of the value retail sector. The group remains confident its portfolio of 16 trading chains is well positioned to outperform in its respective markets— Mr PricePayne and Blair recently told a group of investors the hysteria over the group’s European foray was unwarranted, arguing they have bought a business that might turn out to be the group’s earnings driver in the long term.Blair reminded sceptics that its purchase of Studio 88 also raised eyebrows in some circles at the time, arguing NKD is on course to achieve sales of €1bn by 2030.Mr Price announced the acquisition of NKD in December last year and saw its share price plunge on fears the group was tampering with a winning strategy by making a foray offshore.Mr Price said on Thursday sales for cash now constitute 91.1% of group sales.“The competitor environment was promotional during the period and intensified in June. The objective of growing sales ahead of the market but not at the expense of gross margin was achieved, with African gross margin expanding 40 basis points,” it said.It said the retail operating environment in African and European markets remained unpredictable, with the prolonged geopolitical uncertainty arising from the US-Iran conflict weighing on consumer confidence and contributing to cautious consumer spending.“Current economic conditions continue to reinforce the resilience of the value retail sector. The group remains confident its portfolio of 16 trading chains is well positioned to outperform in its respective markets,” it said.Trading conditions are expected to remain challenging and unpredictable over the balance of the financial year— Mr PriceIn Africa, South African retail sales grew 3.5% to R8.6bn while non-South African corporate-owned store sales decreased 0.3%. Total store sales increased 3.1% while online sales increased 4.7%, contributing 2.4% of total retail sales.The store footprint increased by 32 stores (net) and the total footprint expanded to 3,214 stores.In Europe retail sales totalled R3.8bn. In accordance with its space optimisation programme, 21 stores were closed during the period, and 23 opened, increasing the total footprint to 2,156 stores.“Management is confident of achieving its annual store growth targets. NKD management is focused on operational excellence and delivery of strategic objectives. The process of reducing NKD’s cost of debt is well advanced,” Mr Price said.The group sees the global macroeconomic environment remaining uncertain and the resultant inflationary pressures and potential for further interest rate increases are expected to continue to weigh on consumer confidence and discretionary spending across the group’s key markets. “Trading conditions are therefore expected to remain challenging and unpredictable over the balance of the financial year.”However, the group is confident in its value-focused operating model and ability to navigate the current environment, it said. Business Day