Kingfisher is poised to reap margin benefits from improved cross-border sourcing as it attempts to bring its French and UK operations more closely in line.

Group chief executive Ian Cheshire detailed a seven-point improvement plan as the DIY giant reported that UK sales lagged behind the group for the first quarter, with flagship chain B&Q’s sales falling 5.8 per cent to£997 million and profits down 12.1 per cent to£29 million.

Across the group, sales climbed 8.6 per cent to£2.49 billion and profit rose 8.9 per cent to£96 million for the period.

Cheshire said group sourcing will be one of the pillars of his plan and that there will be an increased focus on fewer categories.

Group sourcing benefits will be most evident at B&Q and French chain Castorama, where there is the greatest product overlap and a big opportunity for margin improvement.

Kingfisher intends to double group sourcing to US$1.6 billion (£818 million) over the next four years and said ranges such as bathrooms and flooring will be at the forefront.

Seymour Pierce analyst Freddie George said: “There’s definitely going to be pressure on margins [during 2008], but they are getting much better at harmonising products across borders. This will lead to margins going up quite substantially.”

Cheshire said that other priorities this year would include cost containment and that sales targets had been adjusted to take account of the UK downturn.

He denied that this would mean store closures here.“All the stores make a contribution in the UK, so it wouldn’t make any economic sense to close any of them,” he said.

Kingfisher’s Eastern European business contributed strongly to international sales, which were up 27.4 per cent to£462 million, while profits rocketed 52.8 per cent to£20 million.

However, in China – which has been hit by problems since last year – the decision has been taken to close five loss-making stores and downsize three more this financial year. At present, Kingfisher has 64 stores in China.