Vancouver, BC, August 11--Home improvement retailer Rona Inc. reported new earnings that rose to $70.4 million, $0.61 per share diluted, on sales of $1.21 billion in the three months ended June 26. That compared to a profit of $53.7 million, $0.46 per share, on sales of $1.08 billion in the same period a year earlier.
Rona is the largest Canadian-owned operator of home improvement stores with more than 500 outlets of varying sizes including a mix of big-box, home-centre and hardware formats.
Analysts surveyed by Thomson Financial had looked on average for earnings per share of $0.58 in the quarter. Same-store sales grew 0.6 per cent during the quarter, the retailer said
The company is on the hunt for more acquisitions to grow its business, including possibly expanding into the United States. Chief executive Robert Dutton said the market is "very good" and Rona has hired more staff to help review an ever growing list of possibilities for the recruitment of new stores to the Rona banner and acquisitions."
"More than ever we're convinced that we have the right business model for the rapidly consolidating the hardware and home renovation market in North America," Dutton told a conference call with analysts. "We are very positive for a good result by the end of the year."
When asked by an analyst if Rona was actively seeking expansion in the United States, Dutton said: "Our eyes are open and our ears too. If we see a good opportunity we are open."
Rona has faced increasing competition in its sector from U.S. retailer Home Depot which has more than 100 stores in Canada. And that is expected to increase with the entry into the Canadian market of U.S. retailer Lowe's which has said it will open six to 10 stores in the Toronto area starting in 2007.
The Quebec-based company has responded by growing aggressively in recent months including recruiting the first store in Nova Scotia to carry its banner during the quarter.
"We're very active in the West and Ontario, but actually the demand for Rona in the Maritimes by dealers to join our group is strong, so we have to take care of that," Dutton said.
The company, which has so far added 21 new affiliates with a total of $124 million in annual retail sales this year, upped its recruitment target for the year from $150 million in annual sales to $175 million.
Helping boost the results was a growing number of stores carrying the Rona banner.The company completed its takeover of Alberta-based Totem Building Supplies Ltd. which added 16 stores in Alberta, along with a distribution centre, and almost doubled Rona's retail network in Canada's fastest-growing province.
Rona said it did not expect any positive synergies from the acquisition this year because of integration costs, but expected the savings to come in 2006.
