February 20, 2008 / 2:35 PM / 10 years ago

Rona blames difficult conditions as profit drops

OTTAWA (Reuters) - Fourth-quarter profit at Rona Inc RON.TO fell 20 percent, the Canadian home improvement retailer said on Wednesday, blaming a “difficult business climate,” supply chain study costs, and one less week of sales versus the same period last year.

Rona Inc.'s President and Chief Executive Robert Dutton talks to reporters before the company's annual shareholder's meeting in Montreal, Quebec May 8, 2007. Fourth-quarter profit at Rona fell 20 percent, the Canadian home improvement retailer said on Wednesday, blaming a "difficult business climate", supply chain study costs, and one less week of sales versus the same period last year. REUTERS/Shaun Best

Rona said net earnings declined to C$30.5 million, or 26 Canadian cents a share, from C$38.1 million, or 33 Canadian cents a share, in the same period a year earlier.

Operating income fell 12.5 percent to C$75.9 million.

The mean analyst estimate was for a profit of 34 Canadian cents a share before exceptions, according to Reuters Estimates.

Revenue dropped 4.8 percent to C$1.08 billion. Excluding the impact of an additional week of sales in 2006, revenue fell 0.4 percent, Rona said.

Same-store sales fell 2.1 percent in the quarter. In November, the company warned that 2007 same-store sales could be weaker than expected, triggering a sharp selloff of Rona’s shares.

Rona said it plans various measures to stimulate sales, including improved store service, a faster launch of new stores, supply chain improvements, inventory reduction, and the review of underperforming stores for restructuring. It will announce its 2008-11 strategic plan next week .

The company’s shares fell more than 8 percent to C$15 on the Toronto Stock Exchange after Rona released its results.

($1=$1.02 Canadian)

Reporting by Susan Taylor; Editing by Peter Galloway

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