* Q2 EPS C$0.52 vs C$0.51 a year earlier
* Revenue up 2.1 percent
* Same-store sales up 0.9 percent
* Shares hits one-year low, down more than 7 pct (Adds analyst's comments, share activity, comments from conference call)
By Solarina Ho
TORONTO, Aug 11 (Reuters) - Rona Inc RON.TO, Canada's biggest home improvement chain, said on Wednesday its quarterly earnings rose nearly 12 percent but the results failed to impress the market and its shares dropped as much as 7 percent to near one-year lows.
Rona, which operates a network of about 700 stores, said a still-buoyant housing market supported sales in the early part of the second quarter but that sales tapered off as consumer confidence flagged, the housing market cooled, and unfavorable weather hit several regions of the country.
The Boucherville, Quebec-based company was cautious about the outlook for the second half of the year. Rona executives said during the conference call that there was an improvement in business activity in July, but that it is expecting a slow recovery overall.
"The fact that they're down more than the market suggests that people are disappointed by the earnings as well as management's quasi-conservative outlook," said analyst Candice Williams of Canaccord Genuity.
She noted that Canadian specialty hardware distributor Richelieu Hardware Ltd (RCH.TO) posted a 57 percent jump in second quarter earnings last month, and said that economic data in April and May suggested Rona's results would be stronger.
Net earnings rose to C$67.8 million ($65 million), or 52 Canadian cents a share, for the period ended June 27. That compares with a profit of C$60.8 million, or 51 Canadian cents, for the same quarter a year earlier.
Analysts had forecast earnings of 59 Canadian cents a share, according to Thomson Reuters I/B/E/S.
Total revenue rose 2.1 percent to C$1.4 billion, while same-store sales climbed 0.9 percent.
Over the last six months, Rona has added 700,000 new square feet of retail space.
"It seems positive that they are managing to actually translate a poor environment into attracting new dealers," Williams said.
Rona stock was down 80 Canadian cents, or 5.6 percent, at C$13.45 on the Toronto Stock Exchange at midafternoon on Wednesday after falling as low as C$13.17. Volume was significantly above average with more than 3.9 million shares changing hands.
"At these share price levels, we think if someone can be patient and wait out a return in the housing market, they're likely to get good performance out of the shares," Williams said.
$1=$1.05 Canadian Reporting by Solarina Ho; editing by Peter Galloway