Home renovations retailer Rona enjoyed its best quarterly results in more than three years in the second quarter, but is starting to see dark clouds in Alberta.
The Quebec-based company said Tuesday that net profit attributable to shareholders was $49.9 million for the three months ended June 28. That’s up from $42 million a year earlier.
Revenues in Rona’s busiest quarter of the year increased 5.9% to $1.26 billion from $1.19 billion a year ago.
The company said retail sales grew 6.7% due to merchandising strategies and the repositioning of the Reno-Depot banner in Quebec, while distribution sales rose 3.7%.
Same store sales — those at stores open at least a year and a key metric in retail — grew 5.4%, well above analyst expectations. Except for the fourth quarter of 2014, it was the highest quarterly sales growth from existing operations since the first quarter of 2010.
CEO Robert Sawyer said the company marked a fourth consecutive quarter of growth despite the ongoing decline in housing starts across the country and a stagnant economy.
“We remain cautious with a challenging outlook for the Canadian housing market and the modest expected consumer spending growth,” he said during a conference call.
Canadian housing starts contracted 8% in the quarter, including a 17% reduction in Western Canada as Alberta starts fell 25%, though British Columbia was up 11.8%. Quebec decreased 15.1% and Atlantic Canada fell 29.5% while Ontario grew 9.6%.
Led by Ontario, Canadian home resales grew 7.6%.
Sawyer said Quebec’s economy continues to be weak and, after a strong spring, sales have begun to wane in Alberta — a smaller market for Rona than Quebec and Ontario.
“We are getting into turbulence in Alberta especially. Going forward, it will be less same store sales positive than we used to experience over the last quarter,” he told analysts.
He said the weaker Canadian dollar will also likely force the company to increase prices.
Rona’s revenues in the second quarter were the highest since the same period in 2012. Almost $97 million in adjusted pre-tax operating profits (earnings before interest, taxes, depreciation and amortization) were the highest since the third quarter of 2011.
Rona and its nearly 24,000 employees operate a network of more than 500 corporate, franchise and independent affiliate stores across Canada.
