Rona Inc (RON.TO), Canada's top home-improvement retailer and distributor, has chosen a long-time supermarket chain executive as CEO, putting Robert Sawyer in charge as it fights back against growing competition from U.S. rivals.
Rona shares rose as much as 6 percent on Tuesday after it said Sawyer, former chief operating officer at Metro Inc (MRU.TO), would replace acting Chief Executive Dominique Boies next month. Rona's longtime CEO, Robert Dutton, stepped down in November.
The Boucherville, Quebec-based company transformed itself from a modest hardware distributor to a national retailer in the 1990s. But it stumbled in recent years as U.S.-based Home Depot Inc (HD.N) and Lowe's Cos Inc (LOW.N), the world's top two home-improvement chains, expanded their presence in Canada.
The decision to bring in an outsider as CEO is the latest step in the company's turnaround plan. In January, it named Robert Chevrier as executive chairman and reshuffled its board. A few months earlier it rebuffed an unsolicited C$1.8 billion ($1.76 billion) takeover proposal from Lowe's.
Rona plans to dispose of its non-hardware, industrial division and is currently in "very serious" talks with prospective buyers, Chevrier said, indicating it could make an announcement before the second quarter.
"I don't think we're too far away from looking ourselves at maybe making acquisitions and enlarging our footprint in Canada and our presence in distribution," he said in an interview after Sawyer's appointment.
The company is planning a major rearrangement of its big-box stores - closing or opening some and remodeling others into its smaller formats.
Chevrier said Rona was not considering a "one-shot solution" such as selling the entire segment, although it might trim the number of big-box stores it operates. The company owns about 80 of them and more than 700 smaller-format outlets.
Jim Durran, an analyst at Barclays, said Sawyer's appointment was positive for Rona given his retailing experience and his familiarity with the province of Quebec, Rona's core market.
At Montreal-based Metro, where he worked for 30 years, Sawyer specialized in retail operations and distribution to dealers and helped improve profits in several areas, Rona said.
"He will play a key role in simplifying and optimizing the Rona business model," Chevrier said. "Robert has the operational and turnaround expertise needed to put Rona back on the path to profitable growth."
Rona shares closed up 4 percent at C$10.98 on the Toronto Stock Exchange after touching a high of C$11.19.
(Additional reporting by Krithika Krishnamurthy in Bangalore.; Editing by Peter Galloway and Andre Grenon)