(Reuters) - Canadian hardware retailer and distributor Rona Inc RON.TO will sell assets and simplify its operations as part of a back-to-its-roots strategy designed to turn its fortunes around, the company’s interim chief executive said on Thursday.
Dominique Boies, who took the reins at Rona following last month’s exit of long-time CEO Robert Dutton, said he plans to bring profit margins in line with industry standards with his changes, which will shift the company’s focus back to its roots as a hardware distributor.
Rona, Canada’s largest distributor and retailer of hardware, home renovation and gardening products, has grown through a series of strategic acquisitions.
But the Quebec-based company has stumbled in recent years amid strong competition from U.S. giants Home Depot (HD.N) and Lowe’s Cos Inc (LOW.N). Earlier this year it was the target of an unsolicited C$1.8 billion ($1.8 billion) takeover proposal from Lowe’s.
Lowe’s withdrew its proposal in mid-September in the face of stiff opposition from both provincial politicians in Quebec and from many of Rona’s independent dealers.
Dutton stepped down early last month, soon after the company announced another quarter of disappointing results.
His departure prompted speculation that the company could be back in play, but in an interview with Reuters on Thursday, Boies said Rona has had no discussions with Lowe’s since rejecting the U.S. company’s proposal earlier this year.
Boies acknowledged that the company’s operations have become too complex. “We are really trying to assess the true performance and true potential of all of our businesses,” he said. “We know that distribution has always been core to Rona and that it is a high-performing business.”
He said Rona plans to simplify its business model and boost its focus on distribution as it disposes of non-core assets and redeploys capital.
The company will offer quarterly updates on its initiatives and performance, and Boies said he will meet with investors and stakeholders in coming weeks to discuss Rona’s strategic and financial priorities.
Last month, following the disappointing results, Invesco Canada Ltd (IVZ.N), one of Rona’s largest investors, called for the removal of the company’s board.
Boies said Invesco has refused to engage in discussions with the company since it issued a release on November 14 disclosing its intent to requisition a meeting of Rona shareholders.
He said Rona remains open to discussions with Invesco and it has even asked Invesco, which controls about 10.16 percent of the company’s shares, for potential nominees to fill two vacant seats on its board.
“We have offered to have Invesco propose candidates and to include them in our process, but they have not done so yet,” Boies told Reuters.
Shares in Rona were up 3.1 percent at C$10.46 in midday trading on the Toronto Stock Exchange on Thursday.
Reporting by Euan Rocha in Toronto and Bhaswati Mukhopadhyay in Bangalore; Editing by Ted Kerr, Janet Guttsman and Peter Galloway