The new chief executive of Kingfisher fears that the worst of the consumer slowdown has yet to hit the high street, despite a sharp fall in sales at B&Q since the start of the year.

Ian Cheshire, who took over at the home improvement retail group in January, said he believed that the full effects of the credit crunch would not hit retailers until the autumn.

A trading statement yesterday showed that like-for-like sales at its B&Q chain tumbled 8.1 per cent in the three months to May 3. However, this was in large part because of poor weather and low sales of barbecues and garden furniture.

Mr Cheshire said: “If you look at kitchens, sales held up, the actual data was pretty good.

“I think there is a lag effect, a six- month break between what we have seen with the drop in mortgage approvals and the time it takes to filter through to consumer spending. I just think we haven't yet seen that impact.”

The warning came as research from Nationwide, Britain's biggest building society, showed that almost two thirds of consumers thought that it was a bad time to spend money on a big purchase, against 49 per cent a year ago.

Analysts believe that trading conditions will get worse for retailers as homeowners facing higher mortgage and energy bills become increasingly worried about falling house prices. Kingfisher said that it was cutting capital expenditure across the business to £400 million this year, 20 per cent below a year ago, in anticipation of lower sales.

“We want to make sure we are positioned for a potential downturn,” Mr Cheshire said. “If sales come through better, then that's fine. This way we are preparing for the worst.”

First-quarter results yesterday showed that despite the setback at B&Q, pre-tax profits in the three months to May 3 rose nearly 9 per cent to £96 million. The growth was fuelled by strong sales across Central and Eastern Europe. Kingfisher plans to double its presence in Russia, Turkey and Poland over the next four years by opening 80 more stores, mostly under the Castorama brand that it owns in France.

Mr Cheshire, who headed B&Q before taking the top job at Kingfisher five months ago, added that managers were being set higher investment return targets in a bid to boost margins across the business. Gross margins in the UK rose by 300 basis points in the first quarter.

Mr Cheshire stands to make as much as £16 million over the next four years in salary and bonuses if he achieves a turnaround at Kingfisher, long seen as a potential takeover target for Home Depot, its American rival. Kingfisher confirmed yesterday that 50 senior managers could earn bonuses of up to four times their salary under an extension of the group's incentive programmes.

Shares in the retailer fell 2.9p, or more than 2 per cent, to 135.9p.

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