Rona suffers 2nd quarter loss amid restructuring plan
Rona Inc. had a $38.7-million loss from continuing operations in the second quarter, as it restructured by closing money-losing stores and ending sports sponsorships agreements.
It was the second quarter of losses for the home improvement retailer and compares with a profit of $35.1 million in the second quarter of 2012.
Boucherville, Que.-based Rona has closed stores in British Columbia and Ontario and laid off employees.
Sales for the quarter fell to $1.25 billion from $1.3 billion last year, a downturn the company blamed on poor weather, reduced construction of single-unit homes in Canada and a construction strike in Quebec. In a conference call, it also cited the strong competition in the home improvement sector.
Same-store sales for the total Rona network were down about one per cent. The rest of the sales decline — about $35.1 million — was a result of store closures.
Rona said it faced $53.7 million in restructuring costs and other charges as well as a $9.1 million adjustments for other costs related to its recovery plan.
However, company president Robert Sawyer said Rona started to see the benefits of its recovery plan in the second quarter, including cost savings related to reduction in administrative positions and renegotiation of major administrative contracts. It estimates about $30 million in savings so far.
Part of the restructuring focus is to improve customer service, Sawyer said.
The net loss amounted to $1.19 per share, which was deeper than analysts expected, while Rona's adjusted earnings and revenue also missed expectations by a wide margin.
Rona's adjusted net income attributable to participating shares amounted to $33.6 million, compared to $45.1 million a year earlier. That equalled 28 cents per share, down from 37 cents a year before and five cents below the estimate.
"2013 is a year of transition for Rona. I have confidence in the future of the corporation," Sawyer said. "Our teams are highly motivated to achieve our goal of reducing costs by an annualized $110 million, of which a portion will be reinvested to improve the customer experience in our four major store categories."