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Lowe抯 Canada CEO says growth, not consolidation after recent Rona acquisitionFriday, May 27, 2016 > 10:22:51
(Financial Post by Damon Van Der Linde)
The CEO of Lowe’s Canada, Sylvain Prud’homme, says he has found a house just five minutes from the new national headquarters that was relocated here from Burlington, Ont., after the acquisition of Quebec’s Rona Inc. went through last Friday.
However, Prud’homme says he isn’t quite ready to move into his new place.
“It isn’t ready because we’re doing a bit of home improvement,” he said with a laugh. “The reality is now the (Canadian) head office is in Boucherville. I personally moved and I’m not planning to move back.”
This commitment to Canada, and particularly Quebec, has been almost a mantra for the North Carolina-based Lowe’s Cos Inc. since it announced its $3.2 billion purchase of Rona which would make itself one of the largest home improvement retailers in Canada.
The merged entity will have 539 store locations across the country with pro-forma revenues of about $6 billion from Canadian operations, though Prud’homme is not giving exact numbers on future targets.
There haven’t been any notices of layoffs in Quebec since the Rona acquisition, which was criticized by some provincial politicians as the loss of a “jewel” in the local business community.
Prud’homme says the company is in fact planning to grow, with the goal of becoming “the number one choice for home improvement” in Canada.
“We are going to look for synergy along the way — for sure, we’re a retailer and we’re a business — but not at the cost of stopping our growth,” he said.
“The short answer is that there is no consolidation beyond what we have now.”
Prud’homme says Quebec accounts for 24 per cent of Canada’s more than $45 billion home improvement market.
The former Rona headquarters appears to be in a state of transition with the branding still a mix of the two companies, something Prud’homme says will continue to be reflected in the stores moving forward, at least in Quebec.
“There’s no plan right now to bring in the Lowe’s banner,” said Prud’homme, adding that major changes to Rona will not likely be seen in Canada until early 2017.
“The Rona brand will survive and will be a strong player for us. There’s a lot of power in that brand. At this point in time we’ve made some commitments that the brand will be out there.”
Prud’homme says some of the major changes customers can eventually expect to see from Lowe’s in Canada will include the sale of appliances and a greater focus on online offerings.
The Rona brand will survive and will be a strong player for us. There’s a lot of power in that brand.
Because a lot of information wasn’t shared between Lowe’s and Rona before the deal closed, Prud’homme says that in the next 90 days the team will be defining what needs to happen from an integration standpoint.
In its financial report for the first quarter — its final as an independent company — last week, Rona said it lost $16.5 million, including $7.6 million in restructuring and acquisition costs.
Revenues, it said, increased 5.1 per cent to $819.2-million with a 3.1 per cent gain in same-store sales.
Lowe’s is already counting on profits from the acquisition, and when it reported its financial results last week it said it now expects to earn US$4.11 per share for this year, up from US$4 a share, due to an 11-cent gain on a currency item related to the Rona purchase.