BOUCHERVILLE, Que.—Rona’s cost-cutting efforts are starting to improve profits but a lengthy stretch of declining sales is unlikely to be broken until next year, the home renovation retailer’s CEO said Tuesday.
After years of declining same-store sales, Robert Sawyer said it would be “very ambitious” to achieve growth this year despite retrofitting its Reno-Depot stores in Quebec and Totem locations in British Columbia.
“Sooner will be better but I think 2015 [is more likely],” he told reporters after the chain’s annual meeting.
The hardware and building materials retailer been lowering prices, cutting the number of available products, and introducing new categories of products to attract more customers to the stores and sell them more.
The former Metro grocery executive said all the changes introduced over the past year haven’t been enough to lift sales as customers have been affected by cold winter weather and the economic overhang, which reduced housing starts.
Rona’s last positive year for same-store sales was 2006.
Rona slowed the flow of red ink last quarter, but still lost $16.6 million as revenues slipped 8.2 percent to $764.3 million from $832.9 million, including an overall four percent drop in same-stores sales, which exceeded analyst forecasts.
The loss amounted to 14 cents per share in the quarter ended March 30, compared with a loss of $36.1 million or 30 cents per share a year ago.
On an adjusted basis, Rona said it lost $14.4 million or 12 cents per share for the quarter from continuing operations compared with a loss of $18.3 million or 15 cents per share a year ago.
The earnings results matched the average analyst estimate but sales were below forecasts, according to analysts polled by Thomson Reuters.
Sawyer denied that the Reno chain is losing ground to rivals Home Depot or Lowe’s, saying only 65 of its 530 stores compete directly with the U.S. chains. It also specializes in the contractor business which its rivals don’t touch, and doesn’t sell appliances like they do.
Rona Not Expecting Growth This Year
Colder than usual winter not helping home renovation business
Rona’s cost-cutting efforts are starting to improve profits but a lengthy stretch of declining sales is unlikely to be broken until next year, the home renovation retailer’s CEO said Tuesday.
Rona CEO Robert Sawyer speaks at the company’s annual meeting in Boucherville, Quebec, on May 13, 2014. Paul Chiasson/The Canadian Press
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