Kingfisher, the retail group that owns B&Q, will shut down its Trade Depot stores after a fall in sales across the group and heavy losses in China.

The group will close nine Trade Depot stores only three years after opening the division.

The announcement came as it unveiled a 4 per cent fall in retail profits for the three months to the start of November, amid a collapse in revenue at its Chinese business.

Retail profit in the third quarter was £176 million, 8 per cent better than last year, but 4 per cent down on a constant currency basis.

Like-for-like sales across the group were down 5.1 per cent. Retail sales in Britain, which accounts for about 40 per cent of group revenue, fell by 9 per cent.

Sales in China plunged 32 per cent on a same-store basis. Analysts said that they were taken aback by the £17 million quarterly loss in the country, where it has already closed four stores.

Trade Depot's nine outlets will be closed at a cost of £20 million in the current year.

The retail format, aimed at the building trade, was introduced in 2005 but failed to take off. Trade Depot units suffered a loss of £5 million in the last financial year.

A spokesman said that “as many as possible” of Trade Depot's 230 staff would be found work elsewhere in the group.

Euan Sutherland, head of Kingfisher UK, said that savings from the Trade Depot closure would be diverted to B&Q and Screwfix, the mail order and online building supplier. Poor August weather and the weakening economy resulted in an 8 per cent decline in sales at B&Q, the company said.

In France, both Castorama and Brico Dépôt gained ground and revenues in the group's French operations rose by 3.7 per cent in local currency. Kingfisher said that overall sales in the French DIY sector were flat, suggesting that Kingfisher had outperformed the market.

Kingfisher's Eastern European businesses continued to perform strongly. The international business overall reported a 7 per cent increase in sales on a constant currency basis, with 10 per cent like-for-like growth in Poland and 21 per cent like-for-like growth in Russia.

Ian Cheshire, chief executive, said: “There are clearly more challenging times ahead.”

He added that the company would retain a tight control on cash and costs, while concentrating on managing its working capital.

Shares in Kingfisher fell 2.9p, or 2 per cent, to 116.6p.

David Jeary, an Investec analyst, said: “UK like-for-like sales are heading towards double-digit declines and the margin outlook for quarter four in both UK and France is much tougher.”

He added that performance in China was “horrible”.

To DIY for

— Kingfisher is the world’s third-largest home improvement group and the biggest in Europe

— Its brands include B&Q, Castorama, Brico Dépôt and Screwfix

— It has more than 800 stores in eight European countries and Asia

— Sales for the year to February 2 were £9.36 billion, more than half of which was generated outside Britain. Adjusted pre-tax profit for the year was £386 million

— It has a 21 per cent interest in Hornbach, Germany’s leading DIY warehouse retailer

Times Recommends

• Gazprom brands Ukraine 'a barbarian' in gas row
• Services sector raises fears over UK jobless
• Retailers surge as profits survive sales plunge