* Loss/share C$0.13 versus analyst forecast C$0.03
* Same-store sales fall 12.6 percent
* Shares fall as much as 10 percent
(Recasts; adds analyst comment, details)
By S. John Tilak
TORONTO, May 10 Rona Inc RON.TO reported a
wider-than-expected quarterly loss on Tuesday as homeowners
pulled back on renovation projects, leading to a sharp decline
in sales at Canada's No.1 do-it-yourself chain.
The company's shares tumbled after it said sales at
established stores fell 12.6 percent in the first quarter. The
stock slumped as much as 10 percent to its lowest in almost two
The decline from sales a year earlier in part reflected a
rush by consumers in early 2010 to buy building materials for
projects before a renovation tax credit program expired.
That said, consumer confidence has not fully returned even
as Canada's economic downturn eased over the past year, and
many homeowevers are holding back on major projects, Rona said.
The company said unfavorable weather also contributed to the
"It was pretty ugly," Edward Jones analyst Brian Yarbrough
said. "The earnings miss was substantial. They're not getting
any leverage on sales."
The sales decline in stores opened at least a year, or
same-store sales, was greater than high-single-digit fall
Yarbrough had expected.
"The environment remained very challenging in the Canadian
home improvement sector," he said. "It comes down to the fact
that consumers are not willing to spend on bigger renovation
Rona, which competes with Home Depot Inc (HD.N) and Lowe's
Cos Inc (LOW.N), reported a first-quarter loss of C$16.8
million, or 13 Canadian cents a share, compared with a net
income of C$3 million, or 2 Canadian cents a share, a year
Analysts on average had expected a loss of 3 Canadian cents
a share, according to Thomson Reuters I/B/E/S.
Revenue fell 4 percent to C$918.2 million, missing the
average analyst estimate of C$931.8 million.
The Boucherville, Quebec-based company's shares, down 19
percent in the past 52 weeks, fell 10 percent to a nearly
two-year low of C$11.95 on Tuesday on the Toronto Stock
The stock was trading at C$12.22, down 8 percent.
(Reporting by S. John Tilak in Toronto, additional reporting
by Maneesha Tiwari in Bangalore)