Retail group Carpetright has stuck by its store expansion plans, despite reports that the UK market for floor coverings had shrunk by as much as 20 per cent.
The company said it was on track to add 75 stores to its portfolio within three years and it was capturing market share as the spending slowdown forces smaller rivals out of business.
Investors also took heart from its target of growing margins this year even though rents and business rates are expected to rise by around £7 million.
Details emerged as the firm reported a 4.1 per cent fall in underlying profits to £62.3 million during the year to April 30 - a better performance than many in the City had been expecting.
Retailers selling big ticket items such as carpets have borne the brunt of the slowdown in spending.
Floors 2 Go shocked the market at the end of last week by warning that like-for-like sales in the second quarter had dropped by 20 per cent on the back of promotional offers on laminate flooring by DIY superstores.
Carpetright said the current turbulence in the market was an opportunity for it to strengthen its position.
Lord Harris, chairman and chief executive, said: "We are not downbeat at all. We are taking market share and it's always during difficult times that you can build a business." Shares in Carpetright rose nearly six per cent in early trading as analysts welcomed the positive tone of the results statement and news of the purchase of Mays Carpets for £6.5 million.
There was also a 6.8 per cent increase in the total dividend to 47p.
Lord Harris said a 1.3 per cent fall in like-for-like sales last year had not left the firm with a glut of carpets that would have to be shifted at bargain prices.
Carpetright said it would continue to manage its costs by not replacing staff when they leave, better distribution and reducing the amount of stock that is lost or damaged.
Sales of £404.1 million for the year were up by 2.1 per cent, mainly reflecting a two per cent increase in trading space at its standalone Carpetright stores.
The firm also has a number of concessions in department stores and expanded into Debenhams in November.
Lord Harris said: "We believe that there is potential for at least 100 concessions in department stores in the medium term."
Meanwhile Lord Harris, who founded the company and whose family owns a 28 per cent stake, dismissed speculation he planned a management buy-out of the retailer.
He said: "We're building the business, we've got a great business, we've got a very good cash flow, and we're looking to expand."