As business challenges go, it should be an attractive one: Take on a $4.8-billion retailer with leading market share, improve profits by shedding weaker divisions, and earn fame and fortune.
Yet Rona Inc. is having a hard time finding a new chief executive. The Quebec company, whose future has been in question since an unsolicited takeover offer from Lowe’s Cos. Inc. emerged and then vanished last summer, is “highly unlikely” to meet its own deadline for installing a new top executive, new chairman Robert Chevrier told The Globe and Mail.
Part of the difficulty lies in the job description. As Rona plans to withdraw from Ontario and concentrate on Quebec, where it is the dominant hardware retailer, the ideal candidate is a shrewd retail operator who could also speak French to Rona’s merchants and employees.
That combination that is not very common in the upper echelons of the business world.
The successor to long-time CEO Robert Dutton, who was ousted in November, was to be appointed by the end of February, the company had stated. Investors believed the Boucherville, Que.-based company would make the announcement when it releases its financial results Feb. 21.
But Rona will likely miss its self-imposed target. “It would take a minor miracle,” Mr. Chevrier said. “For me, it is all-important to find someone who speaks French. And if I can’t find one, I will have a hell of a problem.”
Rona’s two biggest institutional investors chose Mr. Chevrier as the new chairman two weeks ago in a sweeping reshuffling of the board that also ended the prospect of a proxy fight for control.
When he stepped in, however, Mr. Chevrier says he was “disappointed” with the results of the executive search led by Korn/Ferry International.
There were only two candidates on the short list, including an American executive working for Home Depot. And both candidates, whom Mr. Chevrier described as “excellent”, ended up turning down Rona’s offer.
While Mr. Chevrier still has an interview scheduled with a European executive, “Rona is basically starting over [the CEO search] from scratch,” he said.
The chairman is now flipping through his own Rolodex and personally calling up seasoned operators to see if they could be interested in taking on Rona’s top job.
“Some of the people that we initially sought might have been turned off by the looming proxy fight. Now that this threat has been thwarted, they might reconsider,” Mr. Chevrier said.
Invesco Trimark Ltd. had vowed to try to replace all of Rona’s directors at the company’s next annual meeting after Rona reported its last batch of disappointing results and turned down Lowe’s $1.8-billion takeover proposal. But Invesco agreed to back Rona’s restructuring plan when Mr. Chevrier, a turnaround expert, came on board at the Caisse de dépôt et placement du Québec’s suggestion.
Mr. Chevrier is intent on finding a qualified president who can speak French given how Rona’s operations are set to change.
Dominique Boies, chief financial officer and acting CEO, announced in December that Rona will unload its less profitable stores and sell businesses with insufficient scale.
It is an open secret that Rona plans to auction off Noble, the plumbing and heating supply wholesaler it bought in 2007 but that has since grown through smaller acquisitions. Don Park, a manufacturer and distributor of heating and air conditioning products, is also said to be on the block.
Unloading those two business units, which generate most of their sales in Ontario, would increase the proportion of revenues Rona generates from Quebec to 50 per cent from the current level of 45 per cent.
However, Rona is also looking into closing or selling a number of its underperforming big-box stores in Ontario.
That province currently accounts for 24 per cent of Rona’s total revenues, according to figures forwarded by Mr. Boies.
Depending how far the company goes – Rona has “three to four working scenarios,” Mr. Chevrier said – the share of its Quebec revenues will jump even further.
So as Rona is shrinking itself to profitability, it is returning to its Quebec – and essentially French – roots.
“But you know, I won’t pick ‘Mom’ Boucher if he is the only candidate that speaks French,” the chairman added, a tongue-in-cheek reference to Maurice “Mom” Boucher, a Montreal Hells Angels leader serving a life sentence for murder.
With a smaller pool of candidates, finding qualified, French-speaking CEOs is a challenge for Quebec Inc. as their businesses have grown and in many instances now span the globe.
Last year, Montreal engineering firm SNC-Lavalin Group chose an American to replace its former president Pierre Duhaime, and the appointing of Robert Card – whose French is rudimentary at best – ruffled some feathers in Quebec.