Canadian home improvement retailer and distributor Rona Inc <RON.TO> said on Tuesday that deep cost-cutting helped to trim its first-quarter loss, but that a weak market and harsh winter weather hurt sales.
Rona, which has eliminated jobs, closed stores and sold assets under an aggressive restructuring plan, blamed a 4 per cent decline in same-store sales on harsh weather, lower housing starts, the closure of poorly performing stores and the renovation of others.
The Boucherville, Quebec-based company reported an adjusted net loss from continuing operations of C$14.4-million ($13.2-million), or 12 Canadian cents a share, for the quarter ended March 30, down from a loss of C$18.3-million, or 15 Canadian cents a share, in the year-before quarter.
Rona’s shares were 10 Canadian cents higher at C$11.03 on the Toronto Stock Exchange in opening trade.
Canaccord Genuity analyst Derek Dley reiterated his “hold” rating on the shares and his C$11 share target after the results, calling Rona’s performance “another soft quarter” that lagged his expectations.
“We note this represents the 15th consecutive quarter of same-store sales declines,” he wrote in a report to clients.
“In our view, Rona’s operating environment remains highly challenging given what we view as a cautious renovation spending market, along with heightened competition.”
Rona said its net loss fell to C$16.6-million, or 14 Canadian cents a share, from C$36.1-million, or 30 Canadian cents a share.
Adjusted operating income, or EBITDA, rose to C$10-million for the 13-week period from C$1.6-million last year.
Revenue fell 8 per cent to C$764.3-million.
Rona, which cut annual costs by C$110-million last year, said that it will focus on better meeting the needs of key customers this year. The company said it bolstered its marketing, supply chain and merchandising last year, while improving its capital structure.
Rona has about 24,000 employees and operates 500 stores under several banners as well as a wholesaler and eight distribution centers.
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