British retailer Marks & Spencer today posted a second consecutive year of falling first-half profit.
The fall reflected mistakes in its clothing offer and the pressure facing consumers.
The 128-year-old group, Britain's biggest clothing retailer which also sells homewares and food, said that recent trading had been "volatile".
This has made it cautious about the outlook for the rest of the year.
The company said that trading in its European businesses continued to be impacted by macroeconomic pressures, particularly in Ireland and Greece.
It said both of these markets experienced significant declines in the six month period.
But M&S, which trades from 730 UK stores and 390 stores in 44 countries overseas, said it was "well set up" for the Christmas trading period, its busiest time of the year.
The firm said it made a profit before tax and one-off items of £297m sterling in the 26 weeks to September 29. That was at the top end of analyst forecasts of £250-305m and ahead of a consensus of £280m, but down from a pro-forma £307m the same time last year.
Sales from M&S' British stores open over a year were flat in the second quarter, with a 1.8% fall in general merchandise sales offset by a 1.6% rise in food. Analysts had forecast a 2.5% fall in general merchandise like-for-like sales and a 1.5% rise in food.
The general merchandise performance represented a significant improvement on a 6.8% slump in first quarter like-for-like sales blamed on wet summer weather and stock management issues that left stores short of bestselling womenswear lines.
"We took steps to address the short term merchandising issues in general merchandise and as a result, we delivered an improved performance," said chief executive Marc Bolland.
Bolland is half way through a three-year plan to make M&S an international, multi-channel retailer - connecting with customers through stores, the internet and mobile phones. The firm is spending £2.4 billion over three years, investing in store re-vamps, logistics, IT and systems.
Shares in the company have risen 14% over the last three months, buoyed by persistent speculation regarding a possible offer from private equity or a sovereign wealth fund.
M&S said it ended the half with net debt of £2.6 billion and is paying a maintained interim dividend of 6.2 pence.
