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RONA closing 11 unprofitable stores

Canada's largest home improvement retailer, hit by tough times in the past several years, is getting back to basics. Two weeks ago, it announced it was selling its Professional and Commercial division (mostly plumbing, heating and ventilating distribution centres, including the well-known Noble Trade). Last week, it announced major store closures.


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July 2, 2013 by Steve Payne

By Kim Laudrum

www.hardwaremerchandising.ca

Rona Inc. is closing 11 unprofitable stores—eight in Ontario (including six big-box stores) and three in British Columbia—and eliminating 125 jobs to save $70 million, the company announced today.

Six of the store closings are in Ontario. London, Windsor, Mississauga, Woodbridge, Huntsville and Collingwood stores will close in October. The stores in Scarborough and Aurora are expected to close in December.

The three B.C. stores that will close in October are in Duncan, Kamloops and Abbotsford.

“With the measures announced today, Rona will become more agile and efficient, with a simplified business structure and an even stronger balance sheet,” said Robert Sawyer, Rona’s president and chief executive officer.

Rona expects the restructuring effort will save $110 million in annual cost savings this year: The $70 million in anticipated savings announced today are in addition to $40 million announced earlier this year.

Of the $110 million in savings, Rona will reinvest 30 per cent to improve positioning of its banners across the country and help underperforming stores, Sawyer said in a media conference today.

The new measures are expected to cost $95 million in pre-tax restructuring costs, asset impairment and other non-recurring charges. Severance costs for the employees laid off from four administrative centres and store closings are $15 million of that, Rona’s executive vice president and chief financial officer Dominique Boies said.

Rona will also bear a pre-tax charge of $125 million for the disposal of its commercial and professional market division. That sale to EMCO’s Talisker Plumbing for $215 million was announced June 20.

Rona also announced that it is reducing its administrative, marketing, merchandising and distribution expenses. Sawyer said the company is dropping all of the sponsorship programs it once supported, where feasible, and concentrating more of its marketing on printed flyers and advertising.

Sawyer credited new chief operating officer, Alain Brisebois, with “an important change that completely reorganizes” Rona’s banners into: discount stores, big-box stores, proximity stores, and contractor business. Brisebois’ team identified ways to reduce inventory, modify the store’s supply chain push, and reduce some categories that were not returning enough revenue.

By early first quarter 2014 a substantial amount of the $75 million in savings should be realized, Sawyer said.


Steve Payne

Steve Payne

Steve Payne is the editor of Canadian Contractor magazine
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