UPDATE 3-Rona Inc's profit drops, says 'progress interrupted'

Wed Nov 7, 2012 3:15pm EST
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* Adj earnings C$0.27/shr vs C$0.36/shr a year earlier

* Revenue down 0.8 percent at C$1.34 billion

* Rona says difficult market weighs on results

* Shares fall 5 pct (Adds analyst's comments, background on turnaround plan, byline)

By Allison Martell

Nov 7 (Reuters) - Canadian home-improvement retailer and distributor Rona Inc reported a drop in quarterly profit on Wednesday after cutting prices to limit sales declines in a tough market.

Rona launched a turnaround plan earlier this year and refused a takeover by U.S.-based competitor Lowe's Cos Inc . The company said its turnaround plan would proceed.

"Rona saw its progress interrupted in a quarter marked by a decline in the Canadian hardware-renovation industry as a whole," the Boucherville, Quebec-based company said in a release. "The drop in sales, coupled with more intense competition, put pressure on gross margins."

Sales at established stores fell 1 percent, pulled down by retail operations, where same-store sales were 1.8 percent lower. Distribution sales rose on a same-store basis.   Continued...