Its losses had ballooned in the first half of its financial year, hit by weak demand and the fallout of its rescue.
A series of British retailers have either gone out of business or announced plans to close shops, as they struggle against subdued consumer spending, rising labour costs, higher taxes and growing online competition.
Carpetright raised 65 million pounds through an equity issue last June after creditors and shareholders in April backed a Company Voluntary Arrangement (CVA) restructuring to close stores and cut jobs.
The company lost almost 90 percent of its share value in 2018.
Last year Toys R Us UK, electricals group Maplin and drinks wholesaler Conviviality plunged into administration. 2019 has seen household names like Debenhams fall into the hands of lenders.
Carpetright, which opened its first store in 1988, said UK like-for-like sales trend improved significantly in the fourth quarter, compared to the year to date, as customer confidence in the business started to return following its restructuring.
Carpetright's performance was in contrast to upholstery retailer DFS Furniture and floor coverings distributor Headlam, who have blamed weak consumer confidence and flagged a softer trading backdrop in the UK.
Trading in the rest of Europe continued to track ahead of the same period last year, driven by a strong performance in the Netherlands, Carpetright said. It also operates in Belgium and Ireland.
"Whilst consumer confidence remains challenged in the UK, the work we have done to reposition the business is starting to deliver the benefits necessary to put Carpetright back on the path to sustainable profitability," Chief Executive Officer Wilf Walsh said.
Carpetright, which also sells mattresses, headboards, engineered wood flooring and vinyl tiles, it was on course to achieve a 19 million pound annual cash savings target announced as part of its recapitalisation.
"Carpetright's trading update implies an improvement in like-for-like sales performance towards flat and a recovery in profitability sufficient to deliver a positive EBITDA for the full year," Peel Hunt analysts said.
Its shares were up 25.16 percent at 19.15 pence at 0834 GMT, after rising almost 40 percent in early trade.
Carpetright's Thursday's gains take the stock back to levels seen in February, when Chief Financial Officer Neil Page announced his retirement after more than a decade in the role.
(Reporting by Shashwat Awasthi and Karina Dsouza; writing by Noor Zainab Hussain in Bengaluru; editing by Shounak Dasgupta and Jason Neely)
By Karina Dsouza and Shashwat Awasthi