B&Q owner Kingfisher will “reinvent” its store model in China as it prepares to slash shop space in the country by 40 per cent.

The home improvement group’s B&Q China arm, which made losses of £52m and experienced a 24 per cent decline in sales in the year to January 31, is the “most urgent piece of work we have today” said Kingfisher chief executive Ian Cheshire.

Kingfisher’s group profit before tax tumbled 75.4 per cent to £90m, and UK like-for-likes – including B&Q and Screwfix – fell 6.5 per cent.

B&Q China was also a victim of overexpansion as sales in the housing market went from being ahead 40 per cent to down 10 per cent “within a few months” last year, said Cheshire.

The turnaround plan includes employing 600 of B&Q’s own staff in preference to suppliers’ staff in China as well as transferring “a lot of talent” from its UK and French operations.

Own-branded products will rise from 3 per cent of the mix to 10 per cent and central support costs will be cut by 30 per cent.

The retailer, which identified 63 different types of hinges in each store, will cut the products it stocks from 140,000 to 50,000.

22 of the 63 Chinese stores will be closed and a further 17 downsized by subletting space to generate income and drive footfall. Kingfisher is in talks with retailers including Tesco and French groups Carrefour and Decathlon about the surplus space.

Cheshire said: “We’ve clearly made some mistakes as we grew the business through the boom time, concentrating on growth as opposed to format but I’m confident it’s a significant value opportunity for us. There’s more growth yet to come.”

Cheshire said that China’s home improvement market is worth £29bn and that it is possible Kingfisher will add more stores after 2011.

He said turnover in Poland, which climbed 19 per cent in the period, will slow down this year as the global recession takes its toll.

In the UK, Cheshire forecast that more capacity will come out of the DIY market after the crucial Easter trading period.

Seymour Pierce analyst Freddie George said that Kingfisher “should be able to reduce the significant losses from the Chinese business while profits in the UK have, in our view, reached a trough and should start to recover as trade steadily picks up”.