November 10, 2009 / 1:55 PM / 9 years ago

UPDATE 2-Rona profit drops amid weak housing market

* EPS ex-items C$0.41; analyst forecast C$0.40

* Revenue falls 4.4 pct to C$1.32 billion

* Same-store sales down 5.3 pct

* Shares up 1.1 percent at C$15.96 (Adds analyst comments, share price)

TORONTO, Nov 10 (Reuters) - Rona Inc RON.TO reported a lower quarterly profit on Tuesday amid weak same-store sales and a sluggish home renovation market, and warned the soft housing sector will weigh on Canada’s biggest home-improvement chain for some time.

The Montreal-based company with about 700 stores across the country, said earnings fell to C$49.1 million ($46.4 million), or 38 Canadian cents a share, from C$52.5 million, or 45 Canadian cents a share, a year earlier.

Excluding one-time items, such as the cost of store closings, Rona earned C$53.3 million, or 41 Canadian cents a share, down from C$58.9 million, or 50 Canadian cents per share.

Revenue fell 4.4 percent to C$1.32 billion.

Analysts, on average, had expected earnings of 40 Canadian cents a share before one-time items, and revenue of C$1.35 billion, according to Thomson Reuters I/B/E/S.

Rona shares were up 1.1 percent at C$15.96 on the Toronto Stock Exchange.

Same-store sales, a measure of the performance of stores open for at least a year, slipped 5.3 percent due to the slumping economy and the soft Canadian housing market.

The company blamed the drop in same-store sales on a decline in house building and renovation projects as recession weary consumers postponed major home improvement plans.

Earlier in the week, Canada Mortgage and Housing Corp said housing starts rose 5.4 percent in October, a slightly weaker number than expected but still on an upward trend.

“The sales are not there and that’s one of our biggest concerns. Same-store sales are still negative and a ways away from being positive,” said Brian Yarbrough, a retail analyst at Edward Jones in St. Louis, Missouri.

“We just think the consumer environment remains very challenging. People are not willing to spend on the big renovation projects.”

$1=$1.05 Canadian Reporting by Scott Anderson; editing by Rob Wilson

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