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 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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