Rona reports positive results, raises divided

Robert Sawyer, president and CEO of Rona, gets ready for the company's annual general meeting Tuesday, May 12, 2015 in Boucherville, Que. (Paul Chiasson / THE CANADIAN PRESS)

MONTREAL -- Home renovations retailer Rona Inc. reported its best quarterly results in more than three years on Tuesday as it raised its dividend 14 per cent.

The Quebec-based company said its net profit attributable to shareholders was $49.9 million or 46 cents per share for the three months ended June 28. That's up from $42 million or 35 cents per share a year earlier.

Rona also announced it will pay a quarterly dividend of four cents per share on Sept. 25. In the past, it paid a 14 cents per share annual dividend distributed twice a year, but it will now move to a quarterly payout.

Revenues in Rona's busiest quarter of the year increased 5.9 per cent to $1.26 billion from $1.19 billion a year ago.

Rona (TSX:RON) was expected to earn 45 cents per share on $1.25 billion of revenues, according to analysts polled by Thomson Reuters.

The company said retail sales grew 6.7 per cent due to merchandising strategies and the repositioning of the Reno-Depot banner in Quebec, while distribution sales rose 3.7 per cent.

Same-store sales -- a key measure for sales from stores open at least a year -- grew 5.4 per cent, 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.

"This performance underscores the success of the various merchandising and banner repositioning strategies we implemented just over a year ago," he said in a news release.

Canadian housing starts contracted eight per cent in the quarter, including a 17 per cent reduction in Western Canada as Alberta fell 25 per cent, though British Columbia was up 11.8 per cent. Quebec decreased 15.1 per cent and Atlantic Canada fell 29.5 per cent while Ontario grew 9.6 per cent.

Led by Ontario, Canadian home resales grew 7.6 per cent.

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.

Over the past year, the company has repurchased 11 million shares or 9.2 per cent of its outstanding shares.

Rona and its nearly 24,000 employees operate a network of more than 500 corporate, franchise and independent affiliate stores across Canada.

On the Toronto Stock Exchange, Rona's shares were up 47 cents or 3.13 per cent at $15.47 in morning trading.