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The following table shows quarterly achievements since the Corporation's three financial priorities were adopted in the third quarter of 2011.
----------------------------------------------------------------------------FINANCIAL ACHIEVEMENTS VS PRIORITIES PRIORITIES (excluding unusual and non-recurring items)---------------------------------------------------------------------------- Q3- Q4- Q1- Q2- Q4-2012 Q4-2012 2011 2011 2012 2012 Q3-2012(14 weeks)(13 weeks) -------------------------------------------------------------1. IMPROVE EFFICIENCY Same-store sales trending upward yes yes yes yes -1% no +2.9% +0.2% yes Increase in adjusted gross margin in dollars yes yes yes yes -$20.3M no -$10.0M -$17.8M no Decrease in comparable SG&A yes yes yes yes +$2.2M no +$16.4M +$4.1M no Increase in -187 EBITDA margin yes yes yes yes b.p. no -194 b.p. -157 b.p. no2. OPTIMIZE CAPITAL STRUCTURE Sale of assets yes yes yes yes $0.0M no $5.6M $5.6M yes CAPEX / Amortization and depreciation yes yes yes yes 0.8X yes 0.9X 0.9X yes Inventory 3.54 vs 3.54 vs 3.54 vs turnover yes yes yes yes 3.39 yes 3.42 3.42 yes Share repurchase yes yes yes yes n/a(i) n/a(i) n/a(i) n/a(i)n/a(i)3. INCREASE RETURN ON CAPITAL After-tax EBIT yes yes yes yes -$15.9M no - $13.9M - $10.6M no Disciplined capital management (1) yes yes yes yes -$24.1M yes - $43.1M - $43.1M yes Return on 4.8% vs 4.2% vs 4.4% vs capital (2) yes yes yes yes 5.4% no 4.8% 4.8% no----------------------------------------------------------------------------(1) Capital equals net working capital plus property, plant and equipment and intangible assets plus non-current assets held for sale plus goodwill plus current projects plus other financial and non-current assets plus deferred income tax assets minus other non-current liabilities minus deferred tax liabilities.(2) Average return on capital equals after-tax EBIT, excluding unusual and non-recurring items/average capital.(i) The Corporation was prohibited from trading for most of these quarters.
Achievements under the New Realities, New Solutions plan
Announced in February 2012, the theme of RONA's 2012 business plan was New Realities, New Solutions. The plan addressed the need to adapt the offering in our industry to new expectations and changes in the behaviour of many consumers. It was also aimed at improving the performance of our bottom performing stores. The new store formats are generating promising results in line with the favourable trend observed in recent quarters for smaller stores; the performance of the new stores is already better than that of the big-box stores they replaced.
Early in the fourth quarter, we postponed the roll-out of the plan until we finalized the review undertaken under the Corporation's three strategic priorities that were announced in early December. Accordingly, we deliberately postponed the closing of five big-box stores. With the exception of the transformation of TOTEM stores into the new RONA proximity model, which is almost completed, all other initiatives under the New Realities, New Solutions plan have been re-evaluated and incorporated into RONA's new transformational plan announced earlier today.
