Rona Inc. said Chief Executive Officer Robert Dutton, who rebuffed a hostile bid from Lowe’s Cos., is stepping down after 35 years at the Canadian home improvement retailer. The stock had its biggest gain in more than three months.
Rona didn’t give a reason for Dutton’s departure, and said Dominique Boies, the chief financial officer, will be acting CEO until a replacement is found, according to a statement today.
The retailer, based in Boucherville, Quebec, rejected a takeover bid from Lowe’s in September after saying a sale to the U.S. competitor wasn’t in the best interest of shareholders.
Rona reported third-quarter profit on Nov. 7 that missed analysts’ estimates, sending the stock as much as 35 percent below the C$14.50 a share offer from Lowe’s.
Rona climbed 6.5 percent to C$9.96 at 11:26 a.m. in Toronto, the biggest gain since July 31. Its shares have dropped 46 percent in the five years through yesterday.
“New leadership may be what Rona needs,” Irene Nattel, a consumer analyst at Royal Bank of Canada in Montreal, wrote in a note to clients today. “The reality is that earnings have been on a downward trajectory for five years, and possibly a sixth in
2012.” She rates the stock sector perform.
Rona’s earnings fell to 66 cents a share in 2011, adjusted for certain items, from C$1.60 in 2007. Profit dropped to 27 cents a share in the third quarter, missing the average estimate of 40 cents of seven analysts surveyed by Bloomberg.
“During Mr. Dutton’s 20 years at the helm, Rona’s consolidated sales increased from C$450 million to over C$4.8 billion and the Rona chain grew from less than 500 affiliated stores to over 800 corporate, franchised and affiliated stores,” Rona said in a statement.
Lowe’s, based in Mooresville, North Carolina, withdrew its bid in September after opposition from Rona’s board and the Quebec government.
Valerie Lamarre, a Rona spokeswoman, and Stephane Milot, senior director of investor relations, didn’t immediately return calls seeking comment.