UPDATE 2-Kingfisher's deteriorating sales highlight new boss's tough task

* New CEO Thierry Garnier started in September

* Q3 like-for-like sales down 3.7%

* Firm suffering from "organisational complexity"

* New boss to update on strategy in March

* Shares down 5.4% at 0945 GMT (Adds detail, shares)

By James Davey

LONDON, Nov 20 (Reuters) - The new boss of Kingfisher criticised the British home improvement group's "organisational complexity" as it reported a worsening decline in quarterly sales, underlining the uphill task he faces to stem falling profits.

Kingfisher shares slumped as much as 9.3% after its trading update and as Carrefour veteran Thierry Garnier, who succeeded Véronique Laury as chief executive in September, outlined major problems that need to be addressed.

The group, whose main businesses are B&Q and Screwfix in Britain and Castorama and Brico Depot in France, said like-for-like sales fell 3.7% in its third quarter to Oct. 31. They had fallen 1.8% in the first half.

The drop was blamed on continuing disruption from the implementation of new ranges, lower promotional activity and ongoing operational challenges in France, along with softer market conditions in its main markets.

Shares in Kingfisher recovered some early losses and were down 5.4% at 0945 GMT, but have now shed 20% over the past year.

Garnier said he would update on strategy when Kingfisher publishes full year results in March. But he gave his initial view after spending his first eight weeks talking to staff, visiting stores and meeting customers and suppliers.

"My early assessment is that we have not found the right balance between getting the benefits of group scale and staying close to local markets," he said.

"We are suffering from organisational complexity, and we are trying to do too much at once with multiple large-scale initiatives running in parallel."

Garnier said this had disrupted sales and distracted the business from focusing on customers.

He said his priority was to fix operational issues, particularly in IT and the supply chain in France, where like-for-like sales slumped 6.1% in the quarter.

Garnier plans to stop or pause a number of initiatives to concentrate on stabilising performance and trading. He did not say which ones.

Kingfisher, which trades from more than 1,300 stores in 10 countries across Europe, including Poland and Romania, said total sales fell 3.2% at constant currency to 3.0 billion pounds ($3.9 billion). Like-for-like sales were down 1% in the UK and Ireland, and down 3.2% in Poland.

It maintained its forecast for a flat gross margin for the full 2019-20 year.

The group's profits reversed in 2018-19 and are forecast to fall again in the current year. Prior to Wednesday's update analysts were on average forecasting an underlying pretax profit of 633 million pounds, down from 693 million pounds in 2018-19.

Some analysts have speculated the group could be broken-up or be vulnerable to a takeover bid from private equity.

In September, Kingfisher's Chairman Andy Cosslett said the board was not "iron clad" on its current structure but believed it gave it the necessary scale. ($1 = 0.7757 pounds) (Reporting by James Davey; editing by Kate Holton and Susan Fenton)