Kingfisher could face a bill of up to£300 million to close 25 loss-making stores at its 100-strong German electricals chain ProMarkt.
Sources at Kingfisher have indicated that the closure of the unprofitable shops is an option ahead of the planned demerger of electricals in the spring.
According to research by broker Investec, the cost of closing each of the 2,785 sq m stores could be£10 million-plus. Previous estimates for the closures, first mooted by insiders in September, were between£50 million and£150 million.
Investec analyst Matthew McEachran said: 'Given the 20- to 25-year lease structures, combined with costly redundancy payments, the cost could be a lot higher than we originally thought.'
Competition from rivals, such as Metro's Media Markt, has hit ProMarkt, part of the Wegert electricals business.
Investec forecasts sales at Wegert will be£480 million in the year to January, producing a loss of£29 million.
Kingfisher is determined to demerge electricals and will only consider offers of around£2.5 billion for the business, which includes Comet in the UK and Darty in France.
However, current valuations suggest that unless the European market improves by next year, the valuation may need to be cut. A Kingfisher spokesman said there are too many variables involved to comment so far ahead of demerger.