Home improvement retailer Rona (TSE:RON) reported second-quarter profit dipped 40%, hurt by poor weather and cash-strapped consumers, it said, sending its stock down.
The Quebec-based company’s shares dropped 4.85% to $10.20 late Wednesday on the Toronto Stock Exchange.
For the three months ending June 26, revenue fell 2.4% to $1.37 billion.
The company said the decrease stems from a 9.6% drop in same-store sales – a key indicator to a company’s financial health – including average deflation of 0.8% in forest-product prices.
Rona said the slowdown in same-store sales was partially offset by acquisitions, which added $98.6 million in sales to its consolidated revenues, for growth of 7.0%.
Net income came in at $37 million, or 28 cents per diluted share, versus $66.3 million, or 51 cents per diluted share, a year ago.
Wall Street forecasted 40 cents a share of earnings, on revenue of $1.42 billion.
Rona said that the Ontario region was less affected by lower sales, whereas in Western Canada, particularly in British Columbia, the decline had a greater impact.
Revenue in the kitchen and install services categories were relatively solid for the quarter and rose sharply in July, it added.
Sales of lumber and construction materials were weak since the start of the year and only began to strengthen in early July.
"Although the pressure on sales, and the promotional activities demanded by the context affected our earnings, we have managed the situation very prudently,” said CEO, Robert Dutton.
The company said it reduced same-store retail and distribution inventories by $15 million, while also lowering its same-store administrative expenses by 10%.
Despite Rona’s streamlining of operations, it expects continued pressure on same-store sales for the rest of the year, it said.