Kingfisher, one of the UK's leading retail groups, is to divide itself in two in a demerger.

The B&Q and Comet DIY and electrical chains will be retained within a new Kingfisher group, while general merchandise stores Woolworths and Superdrug will be split off.

The separation is expected to take place "within the first half of next year".

The two new companies will be quoted independently on the stock exchange.

Growth

Chief executive Sir Geoffrey Mulcahy said: "The demerger will facilitate growth in general merchandise and enable new Kingfisher to grow more rapidly by focusing on leading international consolidation in DIY and electricals."

The new DIY division will include the 260 Comet electrical stores and 301 B&Q outlets, as well as French electrical chain Darty, German chain Wegert and the French Castorama home improvement stores.

It will total more than 1,300 shops and employ almost 70,000 staff.

The general merchandise goup will include the 795 Woolworths shops and 705 Superdrug outlets.

It will total almost 1,600 shops and employ more than 25,000 staff.

Results

Revealing a slump in half-year profits, Kingfisher said its results would continue to be disappointing in the short-term but that it expected to return to solid profit growth.

Pre-tax profits for the 26 weeks to 29 July, excluding e-commerce investment, were 10% down at �232.5m. This was below analyst expectations.

Total sales in the period rose by nearly 12% to �5.4bn, and were also up 6.5% if new selling space is excluded.

Kingfisher has seen its shares drift down in value after broker downgrades and concern over weak trading figures.

There had been increasing speculation that the group might offload its general merchandise business, which accounts for 30% of total sales but has been hit by cut-throat competition from retail rivals such as Tesco and Asda.