Carpetright's sales rose by "double-digits" up to last December, but this slipped to growth of 1.5 per cent in the final quarter of its trading year to May. Chairman and chief executive Lord Harris forecast a "very tough" year for consumer spending amid government cuts and tax hikes.
He said of the latest trading year: "These results have been delivered through a period of economic recession, with fears of unemployment and tax increases adversely affecting consumer confidence."
Harris added: "It's very, very tough out there, but we're gaining market share."
The group had kept a tight lid on costs, he said, and would continue to strive for contracts with insurance firms and housebuilding groups to offset the weak high street.
"There's a lot of small businesses going out of business and we've got to pick up their market share," Harris said, adding that the overall UK flooring market was down about 24 per cent year-on-year.
Carpetright is also striking deals in the public sector, offering discounts to the police service and health workers.
Underlying pre-tax profits, excluding exceptionals, rose to 22.3 million from 16.7m, on revenues up 8 per cent at 425.2m in the UK and Republic of Ireland.
However, underlying profits are still far short of the 62.1m made in 2008.
The company is recommending a doubling of full-year dividend to 16p, via an 8p final payment.
The group hopes the VAT rise to 20 per cent next January may drive sales forward at the end of 2010 as customers rush to buy before the hike comes in.
Carpetright said it was also optimistic that government austerity measures may be less harsh on lower-paid workers. They form the bulk of its customer base, with 60 per cent of Carpetright customers spending less than 100 on average. Carpetright's shares closed down 70p at 640p.