B&Q owner Kingfisher has recorded a third successive year of declining annual profits and the company has made predictions of a worsening situation.

Annual profits have fallen 2.8%, with pre-tax profits coming in at £386 million in the year ending on 2nd Feb 2008, down from £397 million in the previous year. A lot of the loss in profits can be accounted of due to the expenditure made on revamping and modernising stores and product ranges.

Kingfisher is moving away from its traditional aisle-based format to a more contemporary layout that fully displays their kitchen and bathroom ranges. Although retail profits fell nearly 20% to £113 million after expenses made to refurbish the new stores, Kingfisher claims that early trading figures make them optimistic. The Company states that the new format stores delivered on an average nearly 13% higher than the old-format stores.

Out of the 117 large B&Q stores, 38 are trading on the new format, while nearly 151 of the 206 medium sized stores have been brought up-to-date.

Kingfisher states that sales performances have been better outside the UK; Castorama and Brico Stores in Poland have made profit 42% higher and profits were 13% higher in France. In the UK, the Kingfisher Group operates as Screwfix and Trade Depot and has noticed that the home improvement market has weakened in the second half of the year due to the poor overall performance of the housing market.

In an effort to keep costs low, Kingfisher has decided to cut dividends to shareholders by half to 3.4 pence and may also reduce its six-monthly dividend.

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