UPDATE 2-Carpetright warns on FY as H1 profit slides

* H1 profit down 67 pct, dividend cut by 80 pct

* Says FY profit will likely be in the "low 20 mln stg's"

* Shares down 14.97 pct at 331.5 pence by 0906 GMT

(Adds company, analyst comment, shares, more detail)

By Rhys Jones

LONDON, Dec 16 (Reuters) - Carpetright (CATVU.L), Britain's biggest floor covering retailer, on Tuesday warned its annual profit would fall well below expectations as it reported a 67 percent fall in first half profit and slashed the dividend.

"I'd now expect it (analysts' full year consensus profit forecast) to be in the low 20's (million of pounds) from the 32 million pounds it's at now," Carpetright's Finance Director Neil Page told reporters on a conference call.

Shares in the group, which have lost over half their value in the past year, were 14.97 percent down at 331.5 pence by 0906 GMT on fears Britain's housing market slump will worsen and further impact carpet sales.

The company, which has lowered profit expectations twice in the past two months, posted an underlying pretax profit of 8.8 million pounds ($13.24 million) for the 26 weeks to Nov. 1 on sales 5.6 percent lower at 236.8 million pounds.

Like-for-like sales in the United Kingdom and Ireland fell 13 percent during the period but Europe performed well, growing like-for-like sales by 5.9 percent.

Carpetright, which sells vinyl and laminate flooring, carpets and rugs, reduced the interim dividend by 80 percent to 4 pence and said recent trading had been poor.

"Trading during November was below expectations and like all non-food retailers, we expect it will remain very difficult. The board anticipates the results for the full year will be significantly below current consensus," the company said in its results statement.

The consensus forecast on Reuters Estimates, shows that, on average, analysts expect the company to post a pretax profit for the year to the end of April 2009 of 32 million pounds.

Seymour Pierce analysts said their forecasts were under review and that they were "concerned about the medium term outlook for floor coverings particularly in the first quarter 2009" and reiterated a "sell" rating on the stock.

Carpetright, which earlier this month acquired bed retailer Sleepright UK Ltd for 1.8 million pounds, has been hit hard by Britain's housing market slump, with a drop in new home purchases having a corresponding impact on carpet sales.

"We're not all about housing but consumer confidence, which is low, is important to us, and we hope that will come back in around 18 months," said Page.

($1=.6646 Pound)

(Editing by Sharon Lindores