Carpetright, Britain's biggest floor coverings retailer, said it expected a better performance in the second half of the year after posting a drop in first-half profit in tough markets at home and in the Netherlands.

The firm had warned on year profit in October, blaming a softer market in Britain and a further deterioration in the Netherlands.

Carpetright this morning said it made a pretax profit of £3 million (€3.58 million) in the six months to October 26, down from £4.5 million in the same period last year.

Group revenue fell 2.2 per cent to £222.2 million, with sales at UK stores open over a year down 0.8 per cent and like-for-like sales in the rest of Europe division (Netherlands, Belgium and Ireland) slumping 8.6 per cent.

The firm trades from 474 UK stores and 142 in the rest of Europe division.

"Against a backdrop of volatile trading conditions, our first half performance reflects an improvement in profits in the UK, driven by the continued success of our self-help initiatives, offset by a move into loss in our rest of Europe business," said founder, chairman and major shareholder Philip Harris.

Mr Harris (71), resumed a full-time executive role with Carpetright in October, when the firm parted company with its chief executive Darren Shapland.

Though he anticipated trading conditions would remain challenging he forecast an improvement in group performance in the second half, noting encouraging data in mortgage approvals, and said expectations for the year as a whole were unchanged.

Shares in Carpetright, which have fallen 22 per cent so far this year, closed Monday at 532.5 pence, valuing the business at £358 million.

Reuters