Rona to close Versatile Drive store

Kamloops closure one of 11 in B.C. and Ontario

Nearly five years after opening its doors, the Aberdeen Rona big-box store is shutting down.

"Because the store was underperforming and continues to lose money, Rona decided to close this location so that resources can be re-invested into other stores in the network," said ValÉrie Lamarre, communications officer for the Quebec-based home improvement retailer.

The Versatile Drive store will close on Oct. 6, leaving 51 mostly part-time employees without work, she said.

"Resources will be available to help them transition," said Lamarre, without detailing severance or transferring of workers.

Rona executives announced Thursday that the company will try to rebuild profitability by closing 11 stores - three in B.C. and eight in Ontario.

The 40-year-old Mount Paul Way Rona store, which reopened after $2.25 million in renovations last May, will continue operating. Nick Esser, who manages both Kamloops locations, could not be reached.

Lamarre said she didn't have specifics on the fate of the 4,830-square-metre Versatile Drive building and property.

The City of Kamloops allowed the land's rezoning in 2007 from highway-commercial to shopping centre-commercial to permit the development of the store - a $15-million investment.

The store opened in August 2008 to fanfare and a bustling crowd of shoppers, local politicians, corporate CEOs as well as Olympians and Nancy Greene Raine - Rona was a major 2010 Winter Olympics sponsor.

With its neighbours Costco, Home Depot and Home Hardware, the area became a hub for home renovation shoppers.

Within a year, however, the Home Hardware shut down in favour of expanding operations at the building supply centre on the T'Kemlups Indian Reserve.

Although the news may sound to some as though Kamloops couldn't support the business, Kamloops Chamber of Commerce Bob Dieno was not dejected.

"I don't think it's a sign of any type of negative business (environment) or downturn in the market," he said. "I think the fact they had two big stores in town and Home Depot and Costco right around there made it split their marketplace."

Dieno was also optimistic about the fate of the massive building.

"The reality is, especially in Kamloops, when one thing closes, it will not take long for something else to open up in that location."

The retailer has been struggling for years because of weak consumer spending amid slow economic growth and concerns about unemployment. It rebuffed a takeover bid last summer from U.S. rival Lowe's and faced the departure of its veteran CEO.

Rona also dodged a shareholder revolt by replacing much of its board of directors.

Rona said it told employees last week that 125 more jobs will be eliminated in four administration centres across Canada in addition to 200 administrative positions that were announced in February.

"With the measures announced today, Rona will become more agile and efficient, with a simplified business structure and an even stronger balance sheet," said Robert Sawyer, Rona's president and CEO.

Rona's updated strategic plan is an acceleration of the cost-cutting ideas announced last February, said an industry analyst.

"What we're really seeing here is another case of Rona shrinking for growth," said Derek Dley of Canaccord Genuity.

He said the latest moves represent a reversal of its prior direction by closing stores and selling the professional and commercial division, which it identified as a core growth area only two years ago.

"This to me shows that they're just not able to compete on the big-box level with the likes of Home Depot and Lowe's in those key markets anywhere outside of Quebec," Dley said from Vancouver.

The fact that Rona is closing rather than selling these locations suggests that they are underperforming and likely couldn't attract buyers, he said, adding he doubts Lowe's will try to fill the void.

Irene Nattel of RBC Capital Markets said renovation of Rona's business model against the backdrop of a very challenging macro-economic environment will not be easy "and is best suited to patient investors."

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