Rona restructuring impairment costs push home improvement retailer into the red

BOUCHERVILLE, Que. — Rona Inc. had a $38.7-million loss from continuing operations in the second quarter, reversing a profit in the same period last year, as it recognized restructuring costs and impairment charges related to its recovery plan.The Canada’s largest home improvement retailer, based near Montreal, says its sales for the quarter were also down, falling to $1.25 billion from $1.3 billion — missing analyst estimates.Rona said about $35.1 million of the revenue decline was due to store closures while the remaining $24.5 million drop was due to a decline in same-store sales.It says sales were affected by a difficult market, poor weather, reduced construction of single-unit homes in Canada and a construction strike in Quebec.Rona says the quarter’s loss included $53.7-million in restructuring costs, impairment of non-financial assets and other charges, as well as an adjustment of $9.1 million for other costs related to its recovery plan.The net loss amounted to $1.19 per share, which was deeper than analysts expected, while Rona’s adjusted earnings and revenue also missed expectations by a wide margin.Rona’s adjusted net income attributable to participating shares amounted to $33.6 million, compared to $45.1 million a year earlier. That equalled 28 cents per shared, down from 37 cents a year before and five cents below the estimate.Analysts had estimated 33 cents per share of adjusted earnings and a net loss of $1.30 per share, including one-time items.Same-store sales for Rona’s overall network were down one per cent, due to a decrease of 2.7 per cent in the distribution segment and 0.7 per cent in the retail segment.The decrease was partially offset by new store openings, which added $7.7 million to the quarter’s consolidated revenues.The distribution segment recorded revenues of $349.7 million, down 4.9 per cent from $367.9 million last year, while the retail segment posted sales of $899.3 million, down 4.4 per cent from $940.7 million in 2012.Rona says it’s starting to see the benefits of its recovery plan, as annualized cost-savings are on track to achieve the objective of $110 million.

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