LONDON: Home improvements retailer Kingfisher, said yesterday it was on track to meet first-half profit expectations, with cost cutting and business improvement measures offsetting a dip in underlying sales.

The firm, which runs market leader B&Q in Britain as well as the Castorama and Brico Depot chains in France and elsewhere, said on Thursday sales at stores open at least a year fell 0.8% in the 10 weeks to July 10, its fiscal second quarter. That compared with analysts' forecasts for a broadly flat outcome and follows a 1.8% drop in the first quarter.

Underlying sales in Britain fell 4.4%, hit by a drop in demand for kitchen, bathroom, bedroom and building products as cautious consumers shy away from large purchases.

But that was partly offset by a 2.6% rise in underlying sales in France and a 0.8% increase in other international markets that include Poland and China.

Kingfisher, which runs over 830 stores in eight countries, also said gross profit margins rose in both Britain and France, lifted by cost cutting and moves to buy more products centrally and directly from cheaper manufacturing centres like Asia.

Ian Cheshire, chief executive said: "While we remain cautious about the outlook for consumer spending, we are confident that the strengths of the group and our well established self-help initiatives leave us well-placed to continue our good progress over the balance of the year."

London stock exchange share prices reflected concerns about consumer spending falls and in opening trading Kingfisher shares were down 5.3p at 218.2p. Peer, Home Retail Group, which owns Homebase, fell 1.8p at 233.2p and midcap Wickes operator Travis Perkins dropped 7p at 783p.