* Posts weaker than expected earnings, excluding items
* Shares fall 1.6 percent in early trading
* Rona outlines plan to turn profitable again
TORONTO, Feb 21 Rona Inc, Canada's top
home-improvement retailer and distributor, reported a narrower
quarterly loss on Thursday and outlined plans to expand its
distribution business and scale back its big-box store strategy
outside the province of Quebec.
Fourth quarter earnings for the Boucherville, Quebec-based
company, which also announced plans to cut roughly 200 full-time
administrative jobs, were weaker than expected after stripping
out charges related to restructuring, impairments and other
Rona shares dropped about 1.6 percent after the news.
The company, which rebuffed an unsolicited C$1.8 billion
($1.77 billion) takeover proposal from larger U.S. rival Lowe's
Cos Inc in August, has come under intense investor
pressure after a string of disappointing quarterly results. It
bowed to the pressure and shuffled its board in January,
promising to make "drastic moves" to improve performance.
Acting Chief Executive Dominique Boies said he believes
Rona's new strategy would allow it to get back on a profitable
"We are facing short-term headwind in our industry with key
indicators trending downward but the fundamentals of the
renovation and construction industry remain robust," Boies said
in a statement.
Rona's long-time Chief Executive Robert Dutton stepped down
in November. Rona said on Thursday its search for a new CEO is
well underway and a decision should be announced shortly.
In January, Rona named a new executive chairman and four
other new directors as part of a deal with its top shareholders
to avoid a potentially bruising proxy battle.
The new executive chairman, Robert Chevrier, said last month
Rona would consider selling non-core assets and making other
moves to address weak sales at big-box stores.
Rona was founded in Quebec in 1939 by independent hardware
stores keen to ditch their powerful wholesalers, and the
French-speaking province is still home to about half of its
The company transformed itself from a modest Quebec hardware
distributor to a national retailer in the 1990s, making a string
of acquisitions, in a bid to head off Home Depot Inc as
the big-box retailer arrived in Canada.
Rona said the 15 percent reduction in administrative staff
would result in a restructuring charge of about C$25 million.
The move will boost earnings before interest, taxes,
depreciation and amortization by C$35 million to C$45 million
over the next two years.
Rona shares fell 1.6 percent to C$11.91 in early trading on
the Toronto Stock Exchange on Thursday.
The net loss in the fourth quarter was C$17.9 million ($17.6
million) or 15 Canadian cents a share. That compared with a
year-earlier loss of C$153.6 million, or C$1.19, when its
results were hit by a very large goodwill impairment charge.
Excluding one-time items, the company said earnings in the
period ended Dec. 30 fell to 5 Canadian cents a share, down from
15 Canadian cents a share, a year earlier.
Analysts, on average, had forecast earnings of 12 Canadian
cents a share, according to Thomson Reuters I/B/E/S.
Quarterly revenue rose 2.2 percent to C$1.20 billion, mainly
due to the booking of an extra week of sales in the quarter and
the opening of some new stores.