Kingfisher, the owner of the B&Q DIY chain, has sold its underperforming Italian business for €560 million (£441 million).

Shares in Kingfisher rose by 4 per cent yesterday after the news that the retail group had signed a binding agreement to sell its Castorama Italy chain to Groupe Adeo, a French-based DIY and hardware group.

The disposal is the latest attempt to revamp Europe's biggest home improvements retailer, which has been struggling to remedy falling trade at its British B&Q stores and plunging sales in China.

Ian Cheshire, the chief executive who joined the company this year, aims to revitalise the group, which has £1.5 billion of debt, through a seven-point plan over the next three to four years.

He aims to have flat net debt, excluding disposals, at Kingfisher for the year to January 31.

Total like-for-like sales at Kingfisher were boosted by sunny weather in Britain for the ten weeks to July 12, but rose only 0.2 per cent, while in Italy comparative revenue fell by 0.5 per cent.

During the first quarter, Italy's weak performance was more pronounced, with like-for-like revenue down by 7.1 per cent.

The price of Castorama Italy is substantially above the value its £345 million property portfolio, despite the business performing poorly and a bleak outlook for the Italian economy.

Castorama Italy operates 31 stores, employs 2,200 people and generated profit of £29 million, in the fourth quarter of 2008.

Groupe Adeo operates in nine countries, with brands including Leroy Merlin, the market leader in Italy with 4 per cent of the DIY market. The deal will boost its share to 7 per cent.

Philip Dorgan, an analyst for Panmure Gordon, said that it was “an excellent deal ... It is early days, but we believe the new management team has got off to a good start.”

Italy has proved to be a difficult market for British retailers. DSG, which owns Curry's, the electrical store, recently reported full-year like-for-like sales down 11 per cent at its Italian business.

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