Quebec politicians appeared out of options on Wednesday as the American hardware giant Lowe’s Cos. Inc. announced another series of cuts to the made-in-Quebec home improvement chain Rona Inc.
Quebec’s economy and innovation minister, Pierre Fitzgibbon, lamented a weakening in Quebeckers’ emotional attachment to the Rona brand amid a series of store closures and layoffs dictated by the retailer’s U.S. parent.
Lowe’s, which bought Rona in 2016, announced plans on Wednesday to shutter 34 of its “underperforming” stores in Canada by early 2020, 26 of them Rona stores. That follows 60 layoffs at the company’s Canadian headquarters in Boucherville, Que., last month and 27 Canadian store closures — 24 of them Ronas — last year.
“There’s a breakage of emotional connection between Quebeckers and Rona and I understand why,” Fitzgibbon told reporters at Quebec’s National Assembly on Tuesday. The minister drew ire from independent Rona dealers who run the stores in Quebec after he signalled his preference to shop at Quebec-owned stores last month.
“There is a lot of emotion there,” Fitzgibbon said Wednesday. “But it’s unfair that the independent Rona owners will suffer from that breakage. When I mentioned myself that I would go and shop elsewhere, it was not derogatory for the independents.”
There was little the government could do about the cuts to the Rona chain, Fitzgibbon suggested, pointing to a confidential agreement between Lowe’s and the federal government, signed during the Rona takeover in 2016. The terms of that agreement aren’t public, but one Liberal MNA told La Presse they include commitments on maintaining certain jobs and banners.
Despite Tuesday’s cuts, Fitzgibbon said it appears Lowe’s is still “respecting their commitment.”
Premier François Legault said it was “unfortunate” that the previous provincial government opted not to use Quebec-owned shares in Rona to block a Lowe’s purchase.
“So now, Rona is owned by Lowe’s. It’s a private company,” he told reporters Wednesday. “We have no guarantee from Lowe’s.”
Lowe’s said it was complying with all its federal government agreements. The federal ministry of Innovation, Science and economic development said in a statement that it closely monitors these commitments “on an ongoing basis to ensure compliance.”
“Let’s be realistic,” Fitzgibbon said, “this agreement is on a page and a half. So the commitment on that page is kind of soft…. My job is just to call the federal government to make sure they enforce what they signed in 2016. But it’s pretty soft.”
Lowe’s said the company briefed both the Quebec and federal governments ahead of the announcement Tuesday. The store closures, slated between Jan. 31 and Feb. 19, are part of a push to improve lagging performance in Canada. In a quarterly report Wednesday, Lowe’s chief executive Marvin Ellison said the Canadian operations’ posted negative same store sales growth — a key gauge for success in retail — that fell “below our expectations,” dragging down the company’s three per cent growth in the U.S., to 2.2 per cent company wide. The company’s net earnings were $1 billion in the quarter, up from $629 million a year ago.
Competition in the Canadian home improvement sector has intensified in recent years, both in physical retail and e-commerce, said Kevin Macnab, chief executive at the Home Hardware network of roughly 1,050 stores. The private, Canadian-owned chain, based in St. Jacobs, Ont., has added 70 stores across the country since 2015.
“It has got harder,” Macnab said, pointing to a downward trend in Canadian housing starts.
But Ellison stressed on a call with investors Wednesday that Lowe’s is still committed to the Canadian market, three years after its major expansion into the country. The next step is to “simplify” the group of five hardware store banners that Lowe’s currently operates in the country: Lowe’s, Rona, Reno-Depot, Dick’s Lumber and Ace Hardware.
Lowe’s told the Financial Post that its “banner simplification plan” will preserve the Rona and Reno-Depot brands in Canada. The future isn’t as certain in Canada for the 55-year-old B.C.-chain Dick’s Lumber, and the Illinois-based Ace Hardware.
“We can confirm that our banner strategy will be built on the strength of our Lowe’s, RONA, and Reno-Depot brands,” Lowe’s Canada said in an email Wednesday. “Regarding Ace and Dick’s Lumber, we are currently reviewing all our strategic options. We are not ready to share the details of our strategy at this time.”
Jefferies analyst Jonathan Matuszewski applauded the Canada strategy in a research note, predicting that the moves will “not only improve enterprise profitability, but shore up resources for a honed focus on the U.S. biz.”
Lowe’s has around 600 stores in Canada, employing more than 28,000 people in its corporate-owned Canadian stores and 5,000 in its Rona and Ace dealer-operated stores. The company wouldn’t say how many people would lose their jobs in the store closures. Lowe’s did say it will transfer some employees to nearby stores, noting there were “newly created merchandising support positions at our RONA and Reno-Depot big box stores across Canada.”
“The decision to close stores is never one that we take lightly as we are fully aware of the impacts on our employees and their families,” Lowe’s said in an email. “That being said, as leaders our responsibility is to build a healthy business which will provide us with the flexibility to reinvest in our future growth.
• Email: jedmiston@nationalpost.com | Twitter: jakeedmiston
from Business - Latest - Google News https://ift.tt/2rjnuHB
via IFTTT
November 21, 2019 at 07:40AM
/arc-anglerfish-tgam-prod-tgam.s3.amazonaws.com/public/WURER7JP5RCHZOASINN43GCBHA.JPG)
