CEO of Canada's Rona steps down; shares jump

Fri Nov 9, 2012 3:03pm EST
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By Allison Martell and Euan Rocha

TORONTO (Reuters) - Canadian home-improvement retailer and distributor Rona Inc, which earlier this year rejected a takeover offer from U.S.-based rival Lowe's Cos Inc, said on Friday that Chief Executive Robert Dutton was stepping down, a surprise move that came two days after disappointing results.

Rona said Chief Financial Officer Dominique Boies would serve as acting CEO while the company looks for a successor. Rona shares jumped amid speculation that the Quebec-based company might be in play.

Fund manager Irwin Michael, whose I.A. Michael Investment Counsel Ltd is one of Rona's top shareholders, said Dutton's "completely unexpected" departure gives the company a chance to rethink its plans.

"The fact is, Rona needs change," he said. "They have got to be open to a number of things. They have to consider shareholders as well - the stock has done very, very poorly along with the very poor results."

In an unusual strategy for hardware stores, where big has long seemed beautiful, Rona has put a shift away from big box stores at the center of its turnaround strategy. It is opening more "satellite" and "proximity" outlets that run 5,000 to 35,000 square feet, rather than the 100,000 square feet-plus found at most big boxes.

Lowe's spokeswoman Chris Ahearn said there had not been any recent talks with Rona.

"Since we withdrew our proposal to work with the Rona board, there have been no further discussions," she said.

Acting chief executive Boies joined Rona in 2011, after five years with the Caisse de dépôt et placement du Québec, Rona's top shareholder.   Continued...

Robert Dutton, president and chief executive officer of Rona Inc. speaks during their annual general meeting in Boucherville, Quebec, in this file photo taken May 9, 2012. REUTERS/Christinne Muschi