Canada's Rona outlines turnaround plan as it posts loss
By Euan Rocha and Allison Martell
TORONTO (Reuters) - Rona Inc (RON.TO: Quote), 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.
But shares of the Boucherville, Quebec-based company dropped 3 percent as investors registered their disappointment with the plan, which is designed to counter the threat from U.S. competitors Home Depot (HD.N: Quote) and Lowe's Cos (LOW.N: Quote) and return to the company to profit.
Most of the steps outlined by Rona had been signaled, Canaccord Genuity analyst Derek Dley said, although the company did reveal on Thursday that it now plans to cut about 200 administrative jobs, or 15 percent of its office staff.
"In my mind, I don't think that's really enough to turn around the underperformance at the company," Dley said of Rona's broad plan.
In addition to Rona's net loss for the fourth quarter, earnings excluding one-time items tumbled and fell short of investor expectations, extending a long series of dismal quarters for the company.
"Rona's results were quite a bit weaker than we expected," Dley said. "The home renovation spending market in Canada remains weak, and we continue to think that they're losing market share to Home Depot and some of the other big-box players."
Rona was founded in Quebec in 1939 by independent hardware stores keen to ditch powerful wholesalers, and the French-speaking province is still home to roughly half of its 30,000 employees. Continued...