Canadian home improvement retailer Rona (TSE:RON) Friday announced that CEO Robert Dutton is stepping down after 35 years, just days after the company posted a sharp drop in third-quarter profit as a result of intense competition, a decline in same-store sales, inflation costs and restructuring efforts.
Shares of the company shot up 7.59% after the announcement, trading at $10.06 as at about 1:50 p.m. EDT.
Canada’s largest distributor and retailer of hardware, home renovation and gardening products said that executive VP and CFO Dominique Boies will act as CEO, while the firm Korn/Ferry International has been mandated to find a successor to Dutton.
Under Dutton, who joined Rona in 1977 and became president and CEO in 1992, the company expanded outside of Quebec. Rona said that under his leadership, consolidated sales increased from $450 million to over $4.8 billion and the chain grew from less than 500 affiliated stores to over 800 corporate, franchised and affiliated stores.
The disappointing third quarter results were a result of a decline in the Canadian hardware-renovation industry as a whole, it added.
Looking ahead, the company noted that the market is still in a period of "uncertainty and ambivalence”.
Although conditions were favourable for renovation projects in the spring, the company said it has seen that consumers have returned to a cautious approach since the end of May. Housing starts have also slowed in recent months, particularly in Quebec, where Rona said it generates close to half its sales.
In July, the company rejected a $1.76 billion hostile takeover from U.S. rival Lowe’s Companies Inc. (NYSE:LOW), citing it was not in the best interest of stakeholders.
Rona told Lowe’s on July 26, both the board and a special committee unanimously determined its proposal was not in the best interests of the company and its stakeholders.