February 27, 2008 10:31 ET

RONA Unveils 2008-2011 Plan Focused on Network Optimization and Expansion

BOUCHERVILLE, QUEBEC--(Marketwire - Feb. 27, 2008) - RONA inc. (TSX:RON), the largest Canadian distributor and retailer of hardware, renovation and gardening products, officially unveiled the Company's new business plan for 2008 to 2011 this morning. The Company also made public its financial objectives for the next four years in front of members of the financial community in Montreal for RONA's 2008 Investors Day.

Over the past few years, RONA has greatly improved its positioning and notoriety, especially in Western Canada and Ontario. In the last two years, the company has integrated more than 3,000 new employees into the RONA network, completed six major acquisitions, recruited more than 60 high-performing independent dealer-owners and opened 18 new stores, including six in the West and seven in Ontario. RONA has also surpassed sales objectives for RONA private brand products, which represent 16% of the company's sales, and introduced several new value-added services, including the all-new Project Guide. As RONA moves forward with these promising initiatives, the 2008-2011 business plan will breathe fresh life into its improvement and development ambitions.

"Fuelled by the improvement in our competitive positioning in the past few years, we are looking to move forward and become the complete home solution for consumers," said RONA President and CEO Robert Dutton. "Our new 2008-2011 plan calls for RONA to offer the best service and the best shopping experience to our customer groups. RONA is also looking to be the most effective and innovative player in the industry while we also have every intention of becoming its national leader in terms of sustainable development."

"Our 2008-2011 plan is an important step in RONA's development," added Robert Dutton. "Our strategy is to optimize our network of existing stores while continuing to improve our competitive positioning to ensure we're ready to take full advantage of the situation when our sector recovers."

Phase 1: Network optimization

The first phase of the plan began in early 2008 with a broad optimization scheme called the PEP program, for Productivity, Efficiency and Profitability. This program includes five major projects:

1. Improving the profitability of the corporate store network.

2. Optimizing the supply chain.

3. Investing in training and employee mobilization.

4. Improving information systems, including a new financial suite as well as implementing improved dashboards.

5. Finalizing the integration of the most recent acquisitions and continuous improvement of the integration processes.

To improve efficiency, a few changes have been made to the business model, also known as the House of RONA. It now presents company activities under three different categories: the retail sector, affiliates or independent dealer-owners operating under the RONA banner, and the commercial and professional sector. With many different acquisitions in various sectors of the industry, the recruitment of more than 100 independent dealer-owners in different regions of Canada and the opening of more stores in the last few years, it had become necessary for this new reality to be reflected in the RONA business model.

The retail sector includes corporate and franchise big-box and proximity stores. The affiliate sector includes distribution and support activities for affiliate dealer-owners. The commercial and professional sector includes recent acquisitions of building materials and plumbing specialists as well as the RONA sales force for various products geared to commercial and professional customers. These three sectors are supported by the solid foundation of RONA's merchandising, distribution, marketing and e-commerce activities. Finally, the company's 27,000 employees are working day in and day out to ensure that RONA's unique business model provides customers with the best service and the best shopping experience in Canada.

Phase 2: Acceleration of RONA's development

The second phase of the business plan targets accelerated growth. RONA now operates in three sectors that provide differing growth opportunities. The growth of the company will continue to rely on the four growth vectors that have contributed to its success over the last few years - same-store sales, new store openings, the recruitment of independent dealer-owners and acquisitions - but the vectors will be adjusted to better suit each sector.

In the retail sector, the accent will be on standardization of the store network combined with ongoing innovations in order to become THE destination for the complete housing-related needs of all Canadian consumers. We are planning on redefining and expanding our product line to include complementary categories. We'll also introduce new, innovative concepts for our stores.

For the affiliate sector, greater efforts will be devoted to recruitment activities, in order to become the biggest association of independent dealer-owners in Canada. RONA offers development and expansion support and solutions that no other group in the country can match.

Finally, for the commercial and professional sector, RONA intends to become the national leader in specific product categories or regions that complement retail operations, through organic growth and acquisitions. In general, in the early years of the plan, the focus will be on same-store sales and recruiting independents while continuing to apply the company's rigorous criteria for acquisitions and store openings.

2008-2011 financial objectives

Robert Dutton also presented the main financial objectives of the plan:

- Remain the industry leader in Canada, with a market share of over 20%, with a specific focus in Western Canada and Ontario. RONA's market share is currently evaluated at 17%.

- Increase annual earnings per share by low single digits in the first half of the plan, given difficult market conditions expected for that period, and double digits in the following years.

- Optimize return on invested capital.

- Maintain an investment grade credit rating.

Objectives were also presented concerning improved sales and customer loyalty of the RONA network, including:

- Increase sales penetration among customers with Air Miles cards from 53% to 60% of total retail sales.

- Increase the percentage of sales using the RONA credit card from 1.4% to 4% of sales.

- Increase sales of private brand products from 16% to 20% of sales.

- Launch 15 innovative renovation projects each year through the RONA by Design series.

- Increase the sale of installation services from 2% to 5% of retail sector sales.

- Increase the number of visits to from 1 million to 2 million visits per month.

Another important element of the 2008-2011 plan addresses RONA's commitment to sustainable development. While many initiatives are already in place, we will continue to implement actions involving all of the Company's sectors in order to become THE eco-responsible standard for our industry in Canada.

"With our 2008-2011 plan, we will continue to set ourselves apart by an unbeatable service positioning and by staying at the leading edge of our industry through the development of new concepts and innovative ideas," Dutton concluded. "We will succeed as a team, thanks to our values, our service culture and our unique business model."


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 2007 MD&A under the heading "Risks and Uncertainties."


RONA is the largest Canadian distributor and retailer of hardware, home renovation and gardening products. RONA operates a network of close to 680 corporate, franchise and affiliate stores of various sizes and formats. With over 27,000 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 $6.2 billion in annual retail sales.

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