B&Q owner Kingfisher highlighted the struggle facing UK retailers yesterday as it warned first quarter profits were likely to be 15 per cent lower than in 2004.
The group, which is Europe's biggest home improvement retailer, blamed the drop on poor weather and weak consumer confidence in its core UK market.
Kingfisher shares slumped seven per cent as a result, dragging the FTSE 100 Index sharply lower as investors fretted over the extent of the slowdown in consumer confidence.
Kingfisher, which also owns Castorama in France, did not provide a regional breakdown on its figures but said overall like-for-like sales were likely to be six per cent lower than a year earlier in the three months to April 30.
The company, which has 337 B&Q outlets in the UK, reported first quarter retail profits of £145 million last year, but told the City it expected a decline of about 15 per cent this time.
Analysts responded by slashing their profits forecasts for this year, with Investec's Mark Charnock reducing his estimates by £70 million to £670 million.
Hilary Cook of Barclays Stockbrokers added: "Around half of all DIY sales are within two years of moving house, so with the number of property transactions slowing it is unsurprising that Kingfisher has not been able to buck the trend.
"The consumer is under some pressure and B&Q was always going to be affected by the downturn. This is not a reason to panic though, as Kingfisher remains a very good company."
The update mirrors downbeat comments from elsewhere on the retail sector, as well as official survey data issued last week.
National Statistics said retail sales volumes fell by 0.1 per cent in March, with falls in demand for furniture, electrical and DIY goods.
Kingfisher chief executive Gerry Murphy said it was clear that any sales growth in the UK would be "hard won in very competitive markets".
The group added in a statement: "The trading environment continues to be very tough for UK retailers, with consumer spending increasingly impacted by higher taxes, debt costs and inflation.
"Poor spring weather and an early Easter presented additional challenges for Kingfisher's UK and French consumer businesses."
The gloomy update came as Kingfisher said it was looking to China for further growth, following the acquisition of a business with 13 stores.
B&Q opened its first site in China in 1999 but is already the market leader there with 22 outlets and annual sales of £212 million.