Rona CEO Robert Dutton resigns suddenly
Departure sparks speculation about sale, merger or other changes
Robert Dutton often tells how he once rejected the urging of his father, owner of a 2,500-square-foot Rona hardware store in Laval, to join the head office of the big retailer. He wanted to help expand the Laval business independently.
But armed with a Université de Montréal commerce degree, he later agreed to set up a marketing department for Rona, based in Boucherville. “After six months on the job, I fell in love with the firm and its entrepreneurial spirit and we’ve just grown together,” said Dutton, who joined the company in 1977.
Dutton, Rona’s chief strategist and CEO of Canada’s leading hardware and home renovation group for 20 years, resigned suddenly Friday without disclosing any reasons publicly and raising speculation his departure may ultimately spur a sale, merger or radical network changes.
The resignation also came just a few weeks after Lowe’s, the secondbiggest U.S. home renovation group, withdrew its $14.50-a-share bid for Rona worth $1.8 billion in the face of Quebec government opposition and a resounding “no” from most of Rona’s network of store owners and operators. Many investors wanted the deal to go through, noting Lowe’s offer “to work with the Rona board.”
The retail industry was taken by surprise by Dutton’s resignation, though only last Wednesday Rona reported dismal third-quarter earnings and the stock price remained under heavy pressure. However, revenue held up well at $1.34 billion. Rona’s board said it has hired consultants Korn/Ferry to find a successor and CFO Dominique Boles will act as interim CEO.
“Robert Dutton was a pioneer and has been an inspiration for genera- tions of merchants, managers and employees of Rona,” board chairman Robert Paré said in a statement. “We wish him every success in his future endeavours.”
A Rona spokeswoman, Valérie Lamarre, said the resignation won’t change the company’s strategic plan, while Lowe’s said “since we withdrew our July proposal in September, we have not had any further conversations with Rona.”
Derek Dley, a Canaccord Genuity retail analyst, said investors had been looking for change and they got that Friday, moving shares up a bit. “But Rona still faces strong headwinds from the broad economy and a challenging home renovation market. … I don’t see anything to improve the top line in the near term.”
ABC Funds portfolio manager Irwin Michael said Rona’s management needs to talk to Lowe’s or another prospective partner that may be able to bring in fresh ideas, because of radical changes in retailing and ultra-tough competition from Home Depot.
“A deal with Lowe’s is still possible if politicians and big institutional investors such as the Caisse de dépôt et placement (du Québec) can be persuaded that Canadian jobs are protected and Canadian manufacturers would get a crack at Lowe’s U.S. business,” Michael said.
Rona has almost 1,000 outlets across Canada under various banners, from small neighbourhood units to 150,000-square-foot big-box stores. Home Depot has 180 stores, mostly big-box, across the country and latecomer Lowe’s has 31 bigbox stores. Ontario’s family-owned Home Hardware group has often been mentioned as a possible merger partner for Rona, but it has said it is not for sale.
Some analysts fault Rona for lack of clarity about its recent strategic moves. Dutton earlier this year said he would shut down 10 nonperforming big-box units and focus more on improving the smaller “proximity” and “satellite” stores in line with customer demands. This has since been reduced to five to cushion the financial impact of 10 closings. But head-office layoffs have been carried through.
Dutton, 57, who gradually overcame his lack of familiarity with English, is primarily a marketing man, and he achieved his ambition of creating the Canadian renovation and hardware market leader while retaining some of the co-op principles of Rona’s founders.