The warning came as it reported a solid first-half performance marred only by the price war in do-it-yourself retailing.
While B&Q's profits fell from pounds 46.4m to pounds 40.1m in the six months to 1 August, Kingfisher pleased the stock market with a 4 per cent rise in pre-tax profits to pounds 64.9m and raised the dividend.
Analysts were surprised by the positive net interest figure - the first since the management buyout of Woolworth 10 years ago.
There has been no across-the-board discounting in the do-it-yourself sector since June. Retailers have restricted discounts to particular lines such as paint.
James Kerr-Muir, finance director, said: 'If blanket discounting comes back into the market we will respond to it. We don't want to be embroiled in constant discounting, but we lost market share in February to May and retaliation was essential.'
The group's Woolworth chain, which makes the bulk of its profits in the second half, improved its contribution from pounds 200,000 to pounds 800,000, boosted by strong CD sales. Comet, the electrical chain, reduced its loss from pounds 2.8m to pounds 500,000. Superdrug lifted its contribution from pounds 12.5m to pounds 12.8m.
Geoff Mulcahy, chairman and chief executive, was cautious on the outlook, saying: 'I am often asked when I think the upturn will finally arrive. For me this is no longer the right question. The issue is how to increase profits through the lower growth years to come.'
Earnings per share were flat at 9.2p. The interim dividend is raised from 4p to 4.2p.
View from City Road, page 29