* CEO says UK carpet market down 20-25 percent
* UK/Ireland Q4 like-for-like sales down 15.3 percent
* Expects H2 gross margin 100 basis points below last year
* Shares down 2 percent (Adds detail, CEO comment, shares)
By James Davey
LONDON, April 28 (Reuters) - Carpetright, Britain's biggest carpet retailer, posted a sharp fall in fourth-quarter sales but said it was winning market share and trading should pick up later in 2009 as the housing market recovers.
"The market remains very, very tough, (but) there's no question we're gaining market share in a market that's shrunk somewhere between 20 and 25 percent," Philip Harris, chairman and chief executive of the 692-store group, told a conference call for analysts on Tuesday.
"The recent trend in UK mortgage approvals is improving and we would expect to begin to see this benefit in our sales later in the year," he said.
Shares in Carpetright have lost a quarter of their value over the last year but have gained 44 percent over the last three months, in line with the FTSE All Share General Retailers Index.
The stock was down 10.5 pence, or 2 percent, at 516 pence, at 0850 GMT, valuing the business at 359 million pounds ($522.8 million).
Harris revealed that Carpetright was close to winning some significant insurance business from rivals.
"Although we can't say who we've got, we have succeeded in getting two of the largest (insurance) companies so that will help next year," he said.
The firm was also chasing business from house builders such as Taylor Wimpey Plc.
"We're in talks with them and we should start to do some business with them September, October time," said Harris.
He was also optimistic that Carpetright would pick-up market share given up by the UK's second-largest flooring retailer Allied Carpets, which was acquired by private equity company Sigma last month.
"What I'm told is they're probably going to close 60 to 70 shops. If they do that it will make our position stronger," he said.
Carpetright, which issued a profit warning in December, said sales at stores in the UK and Ireland open more than a year fell 15.3 percent over the 12 weeks to April 25, having fallen 15.9 percent in the third quarter.
The group forecast a second-half gross margin about 100 basis points below the previous year, reflecting the impact of the appreciation of the euro versus sterling on cost prices, along with increased promotional activity.
Many British retailers have struggled over the past year as consumers cut back on spending amid soaring unemployment, falling house prices and fears of a long and deep recession.
Sellers of big ticket discretionary products linked to the housing market have been particularly badly hit.
Carpetright said like-for-like sales at its Rest of Europe division (stores in The Netherlands, Belgium and Poland) fell 1.4 percent in the fourth quarter.
Analysts at Deutsche Bank said in a research note they were reducing their pretax profit forecast for the year to May 2 2009 from 20 million to 18 million pounds. In the previous year the group made 62.1 million pounds.
Carpetright forecast year-end net debt of about 95 million pounds and said a recent deal with its existing banker, Royal Bank of Scotland, meant it has available bank facilities of 135 million pounds. ($1=.6866 pounds) (Editing by Mike Nesbit and Rupert Winchester)