UPDATE 3-Canada's Rona outlines turnaround plan as it posts loss

Thu Feb 21, 2013 2:14pm EST
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* Home improvement chain says new strategy will spur profit

* Analysts say plan may be inadequate to meet challenges

* Shares fall 3.6 percent in midday trading on the TSX (Adds CEO, analysts' comments; updates share price move)

By Euan Rocha and Allison Martell

TORONTO, Feb 21 (Reuters) - Rona Inc, 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 and Lowe's Cos 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.   Continued...