Buoyed by improved sales, RONA pursues “cautious” growth

BOUCHERVILLE, Que. — Positive Q1 results saw RONA’s sales increase by 1.9% and its losses shrink to $11.7 million from $16.5 million. With a healthy increase in its retail same-store sales, the company is moving ahead with the acquisition of the lease for the former Target store in Chilliwack, B.C. The new site will allow RONA to enlarge its current operation in the Fraser Valley city, and was one of six former Target properties for which the company participated in bidding.

The acquisition is part of RONA’s strategy of cautious growth. “We are not an organization … with deep pockets,” said CEO Robert Sawyer in explaining the company’s preference for targeted expansion efforts. RONA is focusing on Western Canada as a field for expansion, with a preference for relocating existing smaller stores to larger settings, and the plans for the Chilliwack store fit both those priorities.

Likewise, Sawyer acknowledged a move to carrying a slightly wider variety of consumer products, without “becoming a grocery store”, while stressing that a number of SKUs not serving the core business had been eliminated. RONA’s retail same-store sales rose 5% thanks to the performance of Western stores and the repositioning of the Reno-Depot banner in Quebec. Those gains were offset somewhat by the effect of poor weather in Quebec and fewer dealer-owners, but as the company  narrows its losses, its share price continues to climb.