The company aimed to open one more mega store in Hong Kong and at least 10 smaller stores, probably in shopping centres, Mr Gilman said but declined to provide a timetable.

It will be the first time Kingfisher, which is listed in London, New York and Paris, has opened stores of less than 15,000 square feet, according to Mr Gilman.

The move could pose a threat to local players such as Pricerite, a unit of Celestial Asia Securities Holdings and Swedish home goods giant Ikea's Hong Kong franchise which is operated by Singapore-listed Dairy Farm Group. These players open their stores mainly inside shopping malls.

Pricerite chief executive Derek Ng Hin-sing said B&Q's expansion in Hong Kong would drive up rental and staff costs.

But Mr Ng did not see the UK-based B&Q as direct competition with Pricerite because Pricerite's niche was in neat and clean products such as cleaning agents and storage boxes. Pricerite, which has 32 stores in Hong Kong with an average size of between 15,000 and 18,000 square feet, plans to open between five and 10 stores this year.

Mr Gilman said while Pricerite was 'the nearest thing to what we are' in Hong Kong, B&Q's competitive edges were its wider product range, its design and installation services.

'We are actively recruiting retired people, including painters, decorators and electricians for home decoration and installation,' he said.

While the one-stop-shop concept has helped boost B&Q's presence and profitability in the mainland, its leading position might be challenged by other foreign home improvement retailers as they stepped up expansion in China.

US-based Home Depot, which in December agreed to buy the mainland's Homeway for US$100 million, has 12 outlets in cities such as Beijing and Qingdao. Home Depot also offers design and installation services in addition to retailing.

B&Q, which acquired a 13-store retail chain in 2005, has 58 mainland stores and plans to open up to 100 by 2010. The expansion plans included adding four stores in Beijing where it has six outlets and adding two outlets in Guangzhou where it has three stores this year.

'We will more likely just carry on now with organic growth,' he said, adding that China was the only territory that B&Q and Home Depot were competing with each other.

Mr Gilman, who is chairman of B&Q China, said B&Q's edge over Home Depot in the country was that his company, which entered the mainland in 1995, had already adapted to retailing in the mainland. It also outnumbered Home Depot in terms of outlets. He said the company would 'probably' open its smaller stores in China, including Beijing and Shanghai, if the strategy worked well in Hong Kong.

B&Q China recorded a net profit of GBP4.6 million (HK$69.8 million) in 2004 and GBP800,000 in 2005 following the chain store acquisition.