* Adj earnings C$0.27/shr vs C$0.36/shr a year earlier
* Revenue down 0.8 percent at C$1.34 billion
* Rona says difficult market weighs on results
(Adds same-store sales, background, quote from CEO)
Nov 7 Canadian home improvement retailer and
distributor Rona Inc reported a drop in quarterly
profit on Wednesday after cutting prices to limit sales declines
in a tough market.
Rona, whose shares fell sharply in early trading, launched a
turnaround plan earlier this year and also refused a takeover by
U.S.-based competitor Lowe's Cos Inc. It said in its
results release that its turnaround plan would proceed.
"Rona saw its progress interrupted in a quarter marked by a
decline in the Canadian hardware-renovation industry as a
whole," the Boucherville, Quebec-based company said. "The drop
in sales, coupled with more intense competition, put pressure on
Sales at established stores fell 1 percent, pulled down by
retail operations, where same-store sales were 1.8 percent
lower. Distribution sales rose on a same-store basis.
Lowe's takeover proposal, which never made it to the formal
offer stage, became a hot-button issue during this year's
provincial election in Quebec, where Rona has deep roots.
Politicians from both the incumbent Liberal Party and the
election's eventual winner, the Parti Quebecois, both opposed
Rona was founded in Quebec in 1939 by independent hardware
stores keen to ditch their powerful wholesalers. The
French-speaking province is still home to about half of its
In its turnaround plan, the company is refocusing on smaller
outlets that it says customers prefer, and it said earlier this
year that it would close 10 of its biggest outlets and split up
13 others by the end of 2013. In their place, it is opening
smaller "proximity" and "satellite" stores.
But on Wednesday Rona said it had postponed the closing of
five big-box stores to better coordinate with the new openings,
and reduce the financial impact of the move.
"The new store formats are generating very promising results
in line with the favorable trend observed in recent quarters for
smaller stores, in spite of challenging market conditions," said
Chief Executive Robert Dutton in the release.
"I'm certain that we are one step ahead of our competitors
in this period of great change in our industry."
Net income fell to C$5.1 million ($5.1 million), or 4
Canadian cents a share, from C$47.8 million, or 36 Canadian
cents, a year earlier.
Excluding one-time items, profit was C$33.1 million, or 27
Canadian cents a share. Analysts, on average, had been expecting
earnings of 40 Canadian cents a share, according to Thomson
Rona said revenue fell 0.8 percent to C$1.34 billion,
compared with the consensus forecast of C$1.36 billion.
Rona's stock was down 5 percent at C$9.64 in early trading
on the Toronto Stock Exchange.
(Reporting by Allison Martell; editing by John Wallace; and