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Rona narrows Q1 loss, same store sales edge down

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Home improvement retailer Rona (TSE:RON) narrowed its fiscal first-quarter loss Wednesday, though the company reported sales from established stores declined amid lower margins.

The retailer narrowed its net loss to $13.3 million, or 10 cents per share, compared with a year-ago loss of $17.6 million, or 13 cents a share.

For the first three months of the year, the company said sales edged up 1.8 percent to $934.9 million compared to $918.2 million a year earlier.

Rona was expected to lose nine cents per share on $917-million revenue, according to analysts polled by Thomson Reuters.

The company attributes the increase to higher distribution sales and its expansion of the commercial and professional market division.

Same-store sales fell 0.8 percent. Sales were down in January, but rose in February and March, the company said.

Comparable sales are considered to be a key measure to gauge a retailer’s financial health as it excludes sales from stores that recently opened or closed during the year.

The company said that same-store sales for stores that specialize in building materials were up 4.2 percent for the first quarter, despite a slow start to the year in this segment.

This demand for building materials bodes well for the coming months, because it usually signals the start of bigger construction and renovation projects, Rona said.

"Despite the trend reversal in same-store sales since the end of fiscal 2011, it is clear that consumers are still cautious," chief executive Robert Dutton said in a statement.

"However, we are encouraged by the early start to the season in our industry and are counting on our effective marketing, merchandising and in-store service programs."

Gross margins eased to 28.58 percent from 28.98 percent a year earlier.

Rona’s board of directors declared a quarterly dividend of 32.9 cents per Class A share, which will be paid to shareholders on July 2.

The Quebec-based company is the largest Canadian distributor and retailer of hardware and home renovation products. Rona supplies nearly 1,500 sales outlets and has about 30,000 employees.

It operates a network of nearly 800 corporate, franchise and affiliate stores under several banners, including a network of 14 hardware and construction distribution centres.

Shares of the company slipped 14 cents, or 1.36 percent, falling to $10.17 each on the Toronto Stock Exchange.

Quick facts: Rona Inc

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TSX:RON
Market: TSX
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