MONTREAL – Lowe’s says the acquisition of Quebec-based Rona has improved its profit forecast for 2016 already, even though the deal has yet to close formally.
The U.S.-based home improvement retailer said Wednesday that now expects to earn US$4.11 per share for this year, up from the previous estimate of US$4, due to an 11-cent gain on a currency item related to Rona purchase.
The C$3.2-billion friendly takeover deal is expected to close this week.
Although the Lowe’s outlook issued Wednesday excludes the revenue from Rona, the North Carolina-based company has said the deal will boost its earnings in the coming year excluding transaction and integration costs.
“The time is right to fortify our Canadian market presence to take advantage of the significant long-term potential we see,” Lowe’s chairman and CEO Robert Niblock said during a conference call Wednesday about its first-quarter results.
“We expect to build on the recent progress our team in Canada has made and the positive results Rona has achieved over recent years as a result of their restructuring efforts.”
Lowe’s (NYSE:LOW) beat expectations as net profits for its first quarter ended April 29 surged 31.4 per cent to US$884 million on a 7.8 per cent increase in sales to US$15.2 billion.
Comparable sales for stores open at least a year grew 7.3 per cent, including double-digit growth in Canada, where it operates 42 stores under the Lowe’s brand.
In its financial report for the first quarter, Rona said last week it lost $16.5 million in the quarter, including $7.6 million in restructuring and acquisition costs. Revenues increased 5.1 per cent to $819.2 million on a 3.1 per gain in same-store sales.