Consumers lose heart, same-store sales fall: Rona

Rona three-month chart(CBC)

Home-improvement giant Rona Inc. says its same-store sales fell 4.4 per cent in the second quarter, a setback it attributes to "a drop in consumer activity related to the decline in consumer confidence compared to the corresponding period in 2007."

Rona, which calls itself the largest Canadian distributor and retailer of hardware, renovation and gardening products, constitutes an economic indicator in its own right, particularly at a time when housing starts and home price gains are slowing.

The same-store measure eliminates the effect of fluctuating store counts. Rona's total sales were little changed in the quarter as its network expanded to more than 680 stores.

In the first quarter, the company blamed harsh winter weather and weak economic conditions for an even worse drop in same-store sales. They fell 5.2 per cent in that quarter excluding price deflation on wood products and the effect of new statutory holidays, it reported in May.

The latest news is mixed from Rona's point of view.

Profit was $80.1 million or 69 cents a share in the second quarter, down from $86.2 million or 74 cents a year earlier.

Total sales were $1.473 billion compared with $1.469 billion a year earlier. The company said it has added a record 21 dealers representing an estimated $100 million in annual sales this year.

Rona's share price was up 10 cents at $12.60 in early Toronto Stock Exchange trading after the earnings were announced Tuesday.

Looking on the bright side, CEO Robert Dutton said the figures "clearly show that the efficiency improvement measures we introduced at the beginning of the year are producing gains and have helped mitigate the downward pressure on sales stemming from the current slowdown in the economy."

He saw a silver lining in the economic troubles, too.

“The current business environment is highly favourable to ongoing consolidation of our market in Canada, especially through the recruitment of independent dealers that want to join a strong banner with a very promising plan for the future,” he said in a statement.

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