Rona to cut 200 jobs after mediocre Q4
Canada’s largest home-improvement chain to focus on core business, reduce holdings
Home improvement retailer Rona Inc. plans to cut 200 full-time administrative jobs across Canada as it looks for ways to become more efficient and improve the customer experience as it continued to underperform in the fourth quarter.
The downsizing, which represents 15 per cent of the retailer’s administrative positions, is part of the company’s plan to focus on its core businesses and reduce other holdings.
Rona also said it’s taking a hard look at its network of big-box retail stores outside Quebec and at its commercial and professional division.
The company is current- ly Canada’s largest home improvement retailer, with more locations across the country than Home Depot or Lowe’s. Investors have been unhappy with Rona’s financial performance, especially since it turned down a takeover offer from U.S.-based rival Lowe’s last year.
“This is a very important day in the history of Rona,” said Dominique Boies, Rona’s acting chief executive.
“We are facing short-term headwinds in our industry with key indicators trending downward but the fundamentals of the renovation and construction industry remain robust,” Boies said. “I strongly believe the strategy we are announcing today will allow Rona to achieve profitable growth and become one of the best performers in the identified core businesses.”
The administrative job cuts are part of an attempt to become “leaner and more efficient.”
The Quebec-based company lost $17.9 million, or 15 cents per share, for the period ended Dec. 30, compared with a loss of $153.6 million ($1.19) a year earlier. Revenues increased 2.2 per cent to $1.2 billion largely on an extra week of business in the quarter.
Adjusting for one-time items, Rona earned $6.6 million or five cents per share, down from $19.7 million or 15 cents per share a year ago.
For the full year, it earned $8 million on $4.9 billion of sales. That compared to a loss of $86.4 million on $4.8 billion of sales in 2011. Adjusted profits decreased nearly 20 per cent to $70 million or 57 cents per share, from $86.9 million or 66 cents in 2011.
Rona was expected to earn 14 cents per share in adjusted profits on $1.13 billion in revenues in the fourth quarter, according to a consensus estimate compiled by Thomson Reuters.
For the full year, analysts forecasted the renovation company’s adjusted profit would dip by one cent to 65 cents per share on $4.87 billion of revenues.
The company said samestore sales, a key measure of well its existing network of stores performed, increased by 2.9 per cent in the quarter, but by only 0.2 per cent excluding the extra week of business. The retail and commercial segment’s same-store sales were up 2.4 per cent, but down 0.7 per cent excluding the week.
Sales of lumber and building materials were strong, but offset by cost inflation and more intense competition.
Rona’s strategic plan also includes quickly adjusting its merchandising, service and pricing strategies to improve customer experience. It’s also planning to optimize or rationalize its none-core and underperforming assets.
However, few details were disclosed apart from specifically mentioning the big-box network outside Quebec and the commercial and professional division.
It said that outside advisers have evaluated strategic options “including sale of some assets, partnership with strategic player, rationalization/ closing or optimization of some stores/facilities.”