April 22, 2009 11:00 ET

At its Annual General Meeting, RONA Outlines 2008 Achievements and 2009 Initiatives, Commemorates 70th Anniversary

BOUCHERVILLE, QUEBEC--(Marketwire - April 22, 2009) - RONA (TSX:RON), the largest Canadian distributor and retailer of hardware, renovation and gardening products, today provided shareholders with a summary of the achievements of its PEP (Productivity, Efficiency, Profitability) program in 2008, along with the steps taken in 2009 to deal with the difficult economic situation and prepare for the recovery that is certain to follow. RONA management also took advantage of the annual shareholders meeting at its Boucherville headquarters to commemorate the Company's 70th anniversary.

In the current economic climate, with consumer confidence deeply shaken, RONA President and CEO, Robert Dutton, reiterated the importance of maintaining and fostering the Company's values in order to guarantee its sustainability. He also mentioned that over the past 70 years, the Company has reinvented itself repeatedly to adapt its business model to new generations and the constantly changing needs of consumers, especially during periods of upheaval. RONA has a clear vision that is shared by its close to 30,000 employees and well established succession at several levels. RONA has confidence in its future and plans to continue to consolidate the Canadian renovation market through its four growth vectors in order to become the complete home solution for Canadians.

"RONA will be 70 this year but you would never know it judging by our extraordinary vigour and energy, not to mention our appetite for growth. Nor would you ever guess by looking at our efforts to renew and innovate in every aspect of our activities, from responsible procurement policies to store design," highlights Robert Dutton. "At RONA, innovations are driven by our very close attention to customer needs, just like a new small business. RONA first saw the light of day at the dawn of the Second World War, and since then we have lived through many upheavals. In these troubled times, it's not a bad thing to think back to those events."

"Recessions always come to an end, and recovery can often be spectatular. In a recession, we have to differentiate between what we can control and what we can't. We can't control 2009. But we can control RONA in 2009, like we controlled RONA in 2008. Back in August 2007, before this recession began, we presented our 2008-2011 strategic plan and the PEP program. Both were carefully designed to prepare for a slowdown period and as our annual report shows, they allow us to take the right steps to get through this recession and prepare for the recovery," Dutton concluded.

PEP program achievements

A full report of the achievements of the PEP program can be found in the 2008 RONA Management's Discussion and Analysis, but here are a few highlights that were mentioned at the annual general meeting.

Even during the difficult economic conditions of last year, RONA increased its adjusted gross margin by more than 100 basis points, at base-weighted distributions. For strictly retail operations, the increase was nearly 120 basis points. This improvement stems from a series of measures: better management of product categories, increased sales of private brand products, reduction of store losses and continued improvement of purchasing conditions with suppliers.

Optimization of the supply chain is another essential aspect of the PEP program. On a comparable basis, inventory shrank by $118 million - or nearly 14% - in just one year. Logistics costs were also reduced by $6 million over the year.

The third component of the PEP program is the accelerated recruitment of affiliate dealer-owners. Affiliates are a critical factor in RONA'S development. In 2008, affiliates posted same-store growth of 3.8%. The Company recruited 31 new affiliates in 2008, adding $132 million to its annual retail sales. Affiliates are a strategic growth vector for RONA and since last November, the recruitment function has come under the CEO's direct responsibility.

The fourth component of the PEP program is improving sales and boosting customer loyalty. Here are just a few of RONA'S accomplishments:

- Private brand sales increased 10% in 2008 and the category now has a penetration rate of 17%.

- Sales related to installation services are up by over 20%.

- AIR MILES® customers have increased their purchases by 10%.

PEP is going strong in 2009: every one of the initiatives is ongoing - including inventory management, increase in gross margin, optimization of the supply chain, growth in private brand sales and, of course, accelerated recruitment of new affiliates.

Other new initiatives are also being introduced, such as the new RONAdvantage program, which adds to the government renovation tax credit programs set up by the federal and Quebec governments. Diversification is a clear advantage in these uncertain times. RONA is in the retail market, and in distribution and in the specialized markets. To capitalize on this advantage, the company will further diversify the activities of its commercial and professional market division - to increase sales to these customer groups across the RONA network.

Financial flexibility

During the annual shareholders meeting, Executive Vice President and Chief Financial Officer, Claude Guevin, summarized the positive effects of the PEP program on the Company's financial flexibility.

"Thanks to our managerial discipline and rigour, this year generated unprecedented cash flows of $350 million. That's why we have been able to continue to invest significant amounts and still reduce our net debt by more than $160 million," Guevin explained.

"Most of our debt is in the form of $396 million debentures that come due in 2016. At the end of 2008, we had access to unused credit facilities totalling over $600 million that will only mature in 2012. The current recession will be long gone by the time we have to re-finance. Our balance sheet is solid: we have access to financial resources that will allow us to continue to invest in our future, seize opportunities that arise, and deal with unexpected events," he added.

Promising sustainable development initiatives

In addition to describing the many PEP program achievements and the strength of RONA's balance sheet, CEO Robert Dutton outlined the importance of making RONA the sustainable development leader in the industry. Although RONA has embraced many sustainable development decisions and initiatives over the years, in 2008 the Company unrolled a complete and consistent strategy in this matter.

The RONA ECO line was launched in 2008. The brand guarantees RONA customers that the products they're buying reduce their environmental footprint in comparison to traditional products across the entire product life cycle. This is a first in Canada and RONA is the very first in the industry to associate its name with products of this type. This year, 50 products bearing this brand name are available. The goal is to reach 250 products by 2011. In addition, RONA offers over 700 eco-responsible products of various brands, with the goal of reaching 2,000 products by 2011.

On July 1st, all RONA stores will stop selling synthetic pesticides for cosmetic use. And after extensive consultation with the lumber industry and environmental groups, RONA adopted a new wood products procurement policy in 2008. Hailed by many environmentalists, the policy has also been recognized by Greenpeace as "the most demanding in North America."


This press release contains forward-looking statements reflecting RONA's objectives, estimates and expectations. Such statements may be marked by the use of verbs such as "believe," "anticipate," "estimate" and "expect" as well as the use of the future or conditional tense. By their very nature, such statements involve risks and uncertainty. Consequently, results could differ materially from the company's projections or expectations. For information on the nature of risk factors not specifically discussed in this press release, please consult RONA's 2008 Management Report under the heading "Risks and Uncertainties."


RONA is the largest Canadian distributor and retailer of hardware, renovation and gardening products. RONA operates a network of close to 700 corporate, franchise and affiliate stores of various sizes and formats. With close to 30,000 employees working under its family of banners in every region of Canada and more than 15 million square feet of retail space, the RONA store network generates over $6.3 billion in annual retail sales.

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