UPDATE 2-Rona posts bigger loss, promises better future

Tue May 14, 2013 1:33pm EDT
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* Will keep big-box network outside Quebec

* Has cut costs by C$17 mln annually, savings target C$35-45 mln

* Calls 2013 "transition year" to promising future

* Stock drops 4 pct on TSX

By Susan Taylor

May 14 (Reuters) - Rona Inc 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 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.   Continued...