Canadian home renovations leader Rona Inc. is looking to expand its presence in Ontario and Western Canada as it pushes ahead with its growth strategy even amid a moderate economic recovery.
The Quebec-based industry leader expects to grow its share of the market over the next couple of years as sales are driven by an economic recovery and acquisitions from industry consolidation.
In its annual outlook conference with investors today, Rona said it plans to boost earnings by 10% to 15% by 2011.
In the nine months ended Sept. 30, the Montreal company earned net profits of $107.4 million on sales of $3.5 billion. That was down from net earnings of $126.7 million on revenues of $3.8 billion for the same 2008 period.
“We are confident that our many initiatives aimed at enhancing the customer experience–innovative store concepts, new product categories, new private and controlled brands, new tools to improve loyalty and stepped-up training for store employees–will drive customer growth,” said president and CEO Robert Dutton.
He added that a company program will lure more independent retailers to join Rona’s network and solidify its role as the consolidator of the Canadian hardware and renovation industry.
Rona expects same-store sales for locations open a year will increase by 2% to 2.5% over the coming two years. That would mark a turnaround from decreases sustained over many months as it faced a deeper recession than it had planned.
Backed by growth, Rona repeated its previously unfulfilled plan that one in five home improvement sales in Canada will be spent in its network of 700 corporate, franchised and affiliate stores.
Rona, which operates 213 corporate and franchise Reno-Depot, Rona and Studio by Rona retail stores currently has 17.5% of the market.
Dutton told analysts at the Toronto conference that there remains plenty of growth opportunities despite lingering economic uncertainty and increased competition.
In addition to acquiring more independent retailers, it will focus on offering a better shopping experience than rivals such as Home Depot and Lowe’s by having better customer service and in-stock products.
Despite the growing presence in Ontario of Lowe’s, Rona said it plans to strengthen its position in Canada’s most populous province by opening new stores, renovating some and harmonizing its network by shedding the Cashway and Lansing banners.
It also plans to improve its position in the West while developing markets in Quebec and Atlantic Canada.
A continued priority will be to further develop the professional and commercial market that’s worth an estimated $70 billion.
Rona plans to expand its private-label product lines and eco-friendly offerings while adding work clothing, furniture, basic auto parts and small appliances.
The company is studying the possibility of adding renewable energy solar panels, products for the physically disabled, pet food and accessories, health, fitness and outdoor products and kitchen items.
