3 Min Read
(Adds earnings expectations, details on 2014 plans, stock price, same-store sales decline)
By Solarina Ho and Susan Taylor
TORONTO, Feb 18 (Reuters) - Rona Inc, a Canadian home improvement retailer and distributor, reported weaker-than-expected fourth-quarter results on Tuesday, blaming extreme winter weather and a decline in home-building for a drop in same-store sales.
The struggling Boucherville, Quebec-based company said it was satisfied with progress made under its ambitious restructuring plan. But Rona's results disappointed the market and its shares dropped 7 percent.
The company said it had reached its 2013 target for cost savings of C$110 million ($100.40 million), a key part of an overhaul plan that includes closing unprofitable stores, shedding noncore assets and cutting jobs.
Chief Executive Robert Sawyer said that in 2014 the company will focus on stabilizing its profit margins and trying to increase market share despite what he called a "cyclical slowdown" affecting the industry.
For the quarter ended Dec. 29, Rona reported adjusted net income of C$4.6 million ($4.20 million), or 4 Canadian cents a share, down from C$6.4 million, or 5 Canadian cents a share, in the same period the year before, which included an extra week.
On average, analysts had expected earnings of 10 Canadian cents a share, according to Thomson Reuters I/B/E/S.
Revenue declined to C$941.1 million from C$1.07 billion.
Sales at established stores fell 3.5 percent, which Rona blamed on poor December weather in Ontario and Quebec and a drop in housing starts.
By yearend 2013, Rona had cut its debt to C$167.2 million from C$299.9 million at the end of 2012. As of Dec. 29, it had C$8.2 million in cash on hand and had used C$45 million of its C$700 million credit line.
The company sold its commercial and professional market division in the fourth quarter and used C$214 million in cash from the sale to reduce its credit facility.
Rona stock was down 7 percent at C$11.51 on the Toronto Stock Exchange on Tuesday, its lowest level since September 2013.
$1=$1.10 Canadian Reporting by Solarina Ho; Editing by Peter Galloway