DAILY NEWS Feb 21, 2013 7:00 AM - 1 comment

RONA Announces Transformational Strategy

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In a press release issued this morning, RONA Inc. outlined its plan to transform the Corporation and accelerate value creation for its stakeholders. It has also released its 2012 results, which it will discuss in a webcast for the business community this morning at 10:00 a.m.

The transformational strategy includes streamlining operations, revamping merchandising and development of its proximity stores.  Here is the release in its entirety.

Over the past two months, RONA's senior leadership team has been focusing on a number of strategic priorities that will redefine the Corporation's business model. The transformation, which has been approved by RONA's newly composed Board of Directors, will be deployed over the next twelve months and yield a growing contribution to profitability with full benefits expected within twenty-four months.

Dominique Boies, Acting CEO, Executive Vice President and CFO mentioned: "This is a very important day in the history of RONA. We are facing short term headwind in our industry with key indicators trending downward but the fundamentals of the renovation and construction industry remain robust. I strongly believe the strategy we are announcing today will allow RONA to achieve profitable growth and become one of the best performers in the identified core businesses".

Highlights of the 2013-2015 transformational plan

  1. Adapt our administrative support model to a leaner and more efficient organization
    • Expected improvement of $35M to $45M in EBITDA, a 15% plus increase over the next 24 months;
    • Reduction of approximately 15% or 200 full-time positions at administrative offices across Canada;
    • Expected restructuring charge of $25M.
  1. Execute rapidly the plan for enhanced customer experience and improved performance in the areas of:
    • Merchandising;
    • Pricing strategy;
    • Service in-store and to franchised and affiliated dealers.
  1. Optimize/rationalize non-core and underperforming assets:
    • Commercial and Professional Market division;
    • Big-box network outside Quebec.
  1. Strengthen, leverage and grow our core markets where profitability is already strong:
    • Our dealers across Canada;
    • Our corporate proximity stores across Canada serving both retail consumers and contractors;
    • Our leading Quebec banners;

RONA's newly appointed Executive Chairman, Robert Chevrier mentioned: "The newly composed Board of Directors fully support management initiatives to rapidly transform the Corporation and turnaround its financial performance in a sustainable way. The Board will monitor closely the execution of the transformation plan and further examine strategic initiatives to deliver value for our stakeholders."

Chevrier added: "Within the search process for the appointment of the new president and Chief Executive Officer, the evaluation of potential candidates is well underway and a decision should be announced shortly. The selected candidates are well aware of the new strategic direction the Corporation is taking and would rapidly be able to lead us through this period of changes."

Boies added: "Dedicated teams are currently executing or planning the various initiatives to drive short-term and longer term results. Short-term actions to redefine the support functions and operating model will result in $35-45 million of expected EBITDA improvement. These benefits and freed up capital from non-core assets will be re-invested in our core businesses in order to deliver the industry leading offering that our customers and dealers have come to expect from us. Leverage from positive same-store sales, in a more constructive economic environment would enhance the positive impact of those initiatives."

The 2013-2015 transformational plan - Progress to date

  1. Adapt our administrative support and process model to a leaner and more efficient organization
    • Direct and indirect detailed SG&A reduction program ready to be deployed;
    • Detailed transition plan developed for 200 employees affected by the reorganisation of our administrative support functions.
  1. Execute rapidly the plan for enhanced customer experience and improved performance
    • With the help of outside industry specialists, specific initiatives developed to revamp merchandising program and optimise pricing strategy in order to regain profitable market share in core businesses;
    • Further workstreams in progress to improve in-store operations, IT and supply-chain effectiveness.
  1. Optimize/rationalize non-core and underperforming assets
    • With the help of outside advisors, strategic options evaluated including sale of some assets, partnership with strategic player, rationalization/closing or optimisation of some stores/facilities.
  1. Strengthen, leverage and grow our core markets where profitability is already strong
    • Plan to improve dialogue and support to franchised and affiliated dealers;
    • Repositioning of the TOTEM banner into RONA's new proximity model well underway;
    • Redefinition of the Réno-Dépôt banner proposition to offer best value for the professional contractor and expert Do-it-Yourself buyers (DIY) in progress.

The different initiatives of RONA's 2013-2015 transformational plan are perfectly aligned with the Corporation's strategic and financial priorities. Similar to the practice adopted for the disclosure of its financial priorities, RONA will provide quarterly updates on specific ongoing initiatives and achievements. Key performance indicators will be provided and reported on for several of the initiatives included in the transformational plan as implemented.

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Reader Comments

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Perhaps all of the stores outside of Quebec should be fined for having too much English writing on their products. Should have taken Lowes buy out offer, please go away and finally fold as nobody shops your student co-op run stores any more.


A NON-Shopper

Posted February 21, 2013 11:00 AM

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