Takeover target Rona's earnings rise with sales
(Reuters) - Canada's Rona Inc RON.TO, which has rejected a C$1.8 billion takeover proposal from U.S. home-improvement retailer Lowe's Cos Inc (LOW.N: Quote), said on Wednesday its quarterly adjusted earnings rose along with higher sales volumes.
The results come as investors try to gauge the chances of Rona - which says it is No. 1 in Canada's hardware and home improvement market - succumbing to a Lowe's takeover.
Rona has said repeatedly that it is not for sale, and the government of the province of Quebec, where it is based, wasted no time criticizing Lowe's proposed offer when it was announced last week.
Rona's stock touched C$14.49 shortly after the news of the C$14.50-a-share offer broke, but since then the stock has consistently traded below that level. Shares rose 1.0 percent to C$13.88 on the Toronto Stock Exchange on Wednesday morning.
On Wednesday's quarterly results conference call with analysts and investors, Rona said it would not discuss the Lowe's proposal.
In the second quarter, Rona's distribution sales rose 8.7 percent and retail and commercial sales were 1.8 percent higher.
"We view the results as mixed," said National Bank Financial analyst Vishal Shreedhar in a note to clients. "Q2 financial results were slightly below expectation; however, management is making progress towards its financial priorities."
Beginning with the quarter, Rona changed the way it measures same-store sales, a yardstick generally designed to strip out gains from opening new outlets. Continued...