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* Says to meet analysts profit forecast of 715 mln stg
* Made profit of 807 mln stg in 2011-12 year
* Q4 like-for-like sales down 3.4 pct, worse than Q3
* B&Q lfl sales down 6.4 pct in fourth quarter
* Shares down 0.9 pct
By James Davey
LONDON, Feb 21 (Reuters) - Kingfisher Plc, Europe'sNo. 1 home improvements retailer, is looking to furtherefficiency savings to offset a worse than expected sales falland allow it to meet forecasts for yearly profit.
The group, which runs market leader B&Q in Britain andtrades as Castorama and Brico Depot in France, is sufferingalong with other European retailers of "big ticket" items likekitchens and bathrooms, which are particularly vulnerable tofragile consumer confidence.
Yet the company is offseting weak demand with a drive toimprove profitability by buying more goods centrally, anddirectly, from cheaper manufacturing centres such as China.
It wants to increase common sourcing for all its brands from2 percent to 50 percent and boost direct sourcing - or buyingstraight from manufacturers instead of via third-partydistributors - to 35 percent from 15 percent.
"We have had a tough fourth quarter, ending what has been atough year impacted by unfavourable foreign exchange,particularly poor weather in the UK and weaker consumerconfidence in our major markets," said Chief Executive IanCheshire.
But Cheshire said the group, the world's No. 3 homeimprovements retailer behind U.S. groups Lowe's and HomeDepot, was still winning market share and benefiting fromits self-help initiatives.
Kingfisher, which trades from over 1,000 stores in eightcountries in Europe and Asia, is also being squeezed by acontinuing low level of housing transactions, since moving houseis often associated with spending on home improvements.
SALES DETERIORATE
It said fourth-quarter sales at stores open for more than ayear fell 3.4 percent, deteriorating from a third-quarterdecline of 2.8 percent.
But underlying pretax profit for the year to Feb. 2 would bein line with analysts' consensus forecast of 715 million pounds($1.1 billion), it said.
That outcome would be 11 percent below the 807 millionpounds made in the previous year, but analysts' forecasts for2012-2013 had been trimmed after British rival Homebase, ownedby Home Retail Group Plc, posted a poor sales update inJanuary.
Shares in Kingfisher, which have proved resilient to thetough economic backdrop and remain not far from a seven-yearhigh of 317 pence set last year, were down 0.9 percent by 1029GMT, valuing the business at 6.5 billion pounds.
In Britain and Ireland, B&Q's like-for-like sales fell 6.4percent in the fourth quarter, worse than analysts' consensusforecast of down 4.5 percent and reflecting the weak consumerbackdrop - particularly in Ireland, where its nine stores aresubject to an examinership, akin to administration in Britain.
In France like-for-like sales fell 0.4 percent at Castoramaand 4.6 percent at Brico Depot. Analysts' consensus was fordeclines of 1.6 percent and 5.3 percent respectively.
The firm said margins in both Britain and France would bedown, partly reflecting price cuts to drive trade.
Evidence of the sector squeeze had already come on Wednesdaywhen Wickes, part of Travis Perkins Plc, posted a 7.6percent decline in like-for-like sales over the first sevenweeks of its new financial year
Some sector observers see underlying problems which B&Q'sself-help measures will do little to address.
"It will be interesting to hear (with full year results) onMarch 26 what the management think about the over-capacity inthe UK DIY market and whether the collapse of its business inIreland is a sign of things to come across this side of theIrish Sea," said independent retail analyst Nick Bubb.
