Shares in the retailer dropped 2.2 per cent to 242¾p as hopes that the UK-based B&Q chain would show positive sales growth were disappointed and the company reported only a slight increase in margins.

Mr Murphy said that unseasonably warm weather and continued pressure on consumers’ free cash from rising bills and interest rates had hit sales. “The warm weather in October and November has not been helpful as our stores are set up for heating, energy saving and Christmas,” he said.

Mr Murphy’s comments echo those of Terry Duddy, chief executive of Home Retail Group, which owns Homebase, B&Q’s rival. He also said that the DIY market had yet to show marked signs of improvement despite a more buoyant housing market and an increase in equity withdrawals.

However, Mr Murphy said that B&Q, which is in the process of a revival under its new boss, Ian Cheshire, had increased market share and that the rate of decline in the DIY market was slowing. “We said that the market was stabilising and that is still our general view compared to last year,” he said.

Underlying sales at B&Q’s UK stores dropped back 1.1 per cent in the 13 weeks to October 28 against a very weak performance in the same period a year before. The chain is completing the revamp of eight of its largest stores under a programme to make them more attractive to female shoppers. B&Q said that it planned to update 25 more next year at a cost of £2.5 million each, with an additional relaunch and disruption cost of £1 million.

Kingfisher had suggested that it could lift gross margins at B&Q by about 1.5 percentage points in the second half of its financial year. Mr Murphy admitted that margin performance was weaker than expected in the third quarter as the highly competitive market forced B&Q to offer customers more discounts than anticipated.

However, he said that the market was “generally more orderly” than last year, when DIY stores had been forced to discount heavily to clear stock, having overestimated the strength of the market.

Mr Murphy said that he expected most of the anticipated margin gains at B&Q to come through in the fourth quarter.

The weak UK performance was offset by a strong performance in Europe and Asia, which lifted total underlying sales for the group by 2.3 per cent and total sales by 8.5 per cent, contributing to a 10.5 per cent lift in retail profits to £173 million for the third quarter. However, analysts said that there was some concern over the performance in France, where Kingfisher owns the Castorama and Brico Depot chains.

Underlying sales rose 1.5 per cent in the quarter, a slight improvement on the previous quarter, but analysts were concerned at comments from Mr Murphy that the fast-growing Brico Depot chain was facing increased competition.

Duncan Tatton-Brown, Kingfisher’s finance director, said he expected analysts’ average profit forecasts for the financial year to fall to about £390 million from £395 million before yesterday’s announcement.

Forecasts for the following financial year were shaved back by about 5 per cent on news of Kingfisher’s investment in refurbishing B&Q stores.

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