Rona posts bigger loss, promises better future
By Susan Taylor
(Reuters) - Rona Inc RON.TO reported a bigger-than-expected quarterly loss on Tuesday as it struggled with tough competition and hefty restructuring charges, but Canada's top home improvement retailer said its turnaround plan would deliver better results.
Rona, which fought off a C$1.8 billion hostile bid from Lowe's Cos Inc (LOW.N: Quote) last summer, is working to rebuild its business during a weak housing market. It said it has made progress on the three-year turnaround plan announced in February, but more work lies ahead.
Its shares fell 4 percent after it announced the results.
Investors were also disappointed by the company's decision to keep its big-box store network outside Quebec, said Canaccord Genuity analyst Derek Dley. That is a departure from its previous strategy to focus on smaller format stores to improve performance.
"It's a very challenging time for the industry in general and more specifically for Rona," Dley said. "This is a company that's been underperforming its peers for the last few years and we don't really see anything in the near term that's going to turn that around."
A recovery plan for its big-box stores will be announced next quarter, the company said.
Rona also promised to detail plans for a division of specialized stores that sell products to commercial and industrial construction customers. In March, it said it was in serious talks with prospective buyers.
Rona, which has a new chief executive in charge of overhauling the company, said it has cut C$17 million in annualized costs through job cuts and new outsourcing deals. It expects to cut C$35 million to C$45 million by the end of 2014. Continued...