In Canada, RONA looks ahead cautiously

RONA, the Canadian hardware and home improvement retailer and distributor, posted net earnings of C$160.2 million (US$126.9 million) in the fiscal year ended Dec. 28 -- down 13.5 percent from C$185.1 million (US$146.6 million) in the prior year.

Same-store sales in the company's corporate and franchise store network declined 4 percent for the year, as total sales increased 2.2 percent to C$4.89 billion (US$3.87 billion).

Highlights of the year included continued expansion of the RONA network, with six new RONA store openings, major renovations of 10 stores, including right Reno-Depot stores in Quebec, recruitment of 31 new independent dealers and completion of more than 160 upgrade and expansion projects in affiliated stores.

RONA president and CEO Robert Dutton pointed to future consolidation in the Canadian market. "The current environment remains highly favorable to ongoing consolidation of our market in Canada, especially through recruitment of independent dealer-owners who want to join a strong brand with a highly promising business development plan," he said.

Dutton added that the company is being careful to adapt operations and capital spending to the "unusual economic conditions we anticipate in 2009." The company plans to reduce capital investments 25 percent, or about C$50 million less than in 2008, he said.

One cause for optimism, the company noted, is the renovation tax credit program introduced by the Canadian government at the start of fiscal 2009. The program offers a return of 13.5 percent on the Canadian taxpayer's investment (up to $10,000) on a wide range of home renovation projects. RONA is complementing the credit with its own sales incentives.

Also in the favor of Canadian retailing, more than 65 percent of existing dwellings are more than 25 years old, the company said. Another strong trend is developing for backyard and patio decoration, as consumers embrace “outdoor living.”

RONA operates a network of nearly 700 corporate, franchise and affiliate stores.