logo-loader
Retail & consumerRetail
viewRona Inc

RONA's blames wider Q1 loss on reluctant consumers & high product costs

construction350_51926da1322af.jpg

 

Home renovation retail chain RONA (TSE: RON) continues to struggle amid increasing competition and the high cost of goods weighing on its bottom line. 

The Boucherville, Quebec-based company says its adjusted quarterly loss widened in the first quarter to $0.19 per share, from $0.11 per share during the same prior-year period. RONA missed analyst expectations by eight cents, the fourth quarter in a row that it has underperformed. 

The news rattled investors, who sent the stock plunging as much as five per cent on the news. 

Revenue fell half a per cent to $929.4 million as a rise in sales in the distribution segment offset gains in the retail and commercial segment. Same-store sales rose 9.5 per cent in the distribution segment and fell three per cent in the retail and commercial segment.

"2013 is clearly a transition year for RONA and further changes will be required to allow us to return to sustained growth in net income," said Dominique Boies, executive vice-president and chief financial officer in a statement.

Part of that transition is the repositioning of the Réno-Dépôt banner and the decision to keep its big-box store network outside Quebec. As part of a cost-cutting plan that trimmed $17 million in mostly workforce-related expenses, RONA says it will target a total cost reduction of $45 million by the end of next year. 

U.S.-based competitor Lowe's (NYSE: LOW) is gradually creeping into Canada, with eyes on setting up more small-format stores. RONA shares have slumped around 20 per cent since Lowe's pulled its $1.8 billion bid for the company. 

RONA was trading $0.39 lower at $10.25 as of 12:15 pm ET. 

 

Quick facts: Rona Inc

Price: 0 CAD

TSX:RON
Market: TSX
Market Cap: $0.00
Follow

Add related topics to MyProactive

Create your account: sign up and get ahead on news and events

NO INVESTMENT ADVICE

The Company is a publisher. You understand and agree that no content published on the Site constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is...

FOR OUR FULL DISCLAIMER CLICK HERE

Watch

Full interview: Fireweed Zinc reveals 'best ever' hole drilled at Macmillan...

  Fireweed Zinc Ltd (CVE:FWZ) CEO Brandon Macdonald tells Proactive the zinc explorer has posted encouraging drill results from the first hole this year at the Boundary Zone in Yukon, an area that could boost the Macmillan Pass project's resources and economics. Macdonald says the...

2 days, 3 hours ago

2 min read