Rona shaves loss but weather and soft market weigh
TORONTO (Reuters) - Canadian home improvement retailer and distributor Rona Inc RON.TO said on Tuesday that deep cost-cutting helped to trim its first-quarter loss, but that a weak market and harsh winter weather hurt sales.
Rona, which has eliminated jobs, closed stores and sold assets under an aggressive restructuring plan, blamed a 4 percent decline in same-store sales on harsh weather, lower housing starts, the closure of poorly performing stores and the renovation of others.
The Boucherville, Quebec-based company reported an adjusted net loss from continuing operations of C$14.4 million ($13.2 million), or 12 Canadian cents a share, for the quarter ended March 30, down from a loss of C$18.3 million, or 15 Canadian cents a share, in the year-before quarter.
Rona's shares were 10 Canadian cents higher at C$11.03 on the Toronto Stock Exchange in opening trade.
Canaccord Genuity analyst Derek Dley reiterated his "hold" rating on the shares and his C$11 share target after the results, calling Rona's performance "another soft quarter" that lagged his expectations.
"We note this represents the 15th consecutive quarter of same-store sales declines," he wrote in a report to clients.
"In our view, Rona's operating environment remains highly challenging given what we view as a cautious renovation spending market, along with heightened competition."
Rona said its net loss fell to C$16.6 million, or 14 Canadian cents a share, from C$36.1 million, or 30 Canadian cents a share.
Adjusted operating income, or EBITDA, rose to C$10 million for the 13-week period from C$1.6 million last year. Continued...