Profits fell at Marks & Spencer in the first half as the company was forced to cut prices to attract customers.
Pre-tax profits in the in the six months to the end of September were £320.5m, down from £348.6m the previous year.
M&S said its general merchandise sales were down 0.8% with like-for-like sales down 1.3%.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
However, food sales were up 3.9%, with like-for-like sales up 2.1%.
The firm said it had maintained its overall share of the clothing and food markets and had seen a 9% increase in international sales.
Going forward, M&S said the second had has started in line with expectations but warned operating costs were expected to increase around 3%.
The rise would be a result of increased depreciation, space growth and inflation, as well as investment in growth initiatives, offset by underlying savings, the company said.
It would come on top of UK operating costs which were up 2.9% in the first half.
"In an increasingly promotional environment, we managed costs tightly and took a decision to invest in giving our customers better value, choosing not to pass on the full extent of the increases in commodity prices," chief executive Marc Bolland.
"Against a challenging consumer backdrop, we took decisive action to manage the business through the short term while continuing our focus on investing in creating a stronger platform for future growth," he said.
