U.S. Markets open in 6 hrs 22 mins

Rona's top executive resigns

MONTREAL (AP) -- The president of Canada's largest network of home-improvement retailers stepped down Friday as top executive at Rona Inc., amid tumbling net profit.

Robert Dutton's resignation ends a 35-year career at Rona, headquartered in Boucherville, Quebec. He joined the company in 1977 and became its president and chief executive in 1992.

"Robert was a pioneer and has been an inspiration for generations of merchants, managers and employees at Rona," said board chairman Robert Pare.

Rona chief financial officer Dominique Boies will be interim CEO while the company's board seeks a permanent successor.

The company's announcement, which didn't include a statement from Dutton, came one day after Rona announced its third-quarter net profit fell nearly 90 percent due to more competition and one-time costs. The dramatic drop saw third-quarter profit fall to US$5 million (CA$5.1 million) from US$47.7 million (CA$47.8 million).

Rona shares were up 7.5 percent, or 70 cents, to $10.05 in afternoon trading on the Toronto Stock Exchange.

Dutton's departure comes just months after the Canadian home improvement chain fended off a takeover attempt by U.S. rival Lowe's, which was rebuffed not only by the Rona board but also Quebec provincial politicians.

Quebec politicians said they were against a foreign takeover of such a major employer. A group representing independent owners that operate under the Rona brand also said the Lowe's business model didn't suit them either.

One of Rona's largest shareholders said the board should reopen discussions with rival Lowe's following the sudden departure of its long-time chief executive.

Irwin Michael, portfolio manager of Toronto-based ABC Funds, said Rona needs to undertake major change in the face of years of poor results and a weak retailing environment.

"One major way might be talking to Lowe's or someone else who might bring on new fresh ideas," Michael said.

Michael said he was surprised by Dutton's resignation, since he appeared to be firmly in control of the company.

The Dutton era was a period when Rona grew enormously. It did so by building new big box locations, making acquisitions and partnerships in Canada's fragmented home-improvement industry, and adopting a variety of store formats.

It currently has nearly 30,000 employees and 830 locations under its banner, giving Rona a bigger reach in Canada than Home Depot or Lowe's, the top home improvement retailers in the United States.

Home Depot has just 180 stores across Canada and Lowe's has about 31 Canadian locations, out of 1,745 across North America.

Michael said he thinks a Lowes-Rona deal can be sold to politicians if jobs are protected and Canadian manufacturers are able to supply the Lowe's network across North America.