Shares fell 3.6% 291p in morning trading.
The retailer has shut 29 out of the 100 stores it has earmarked for closure in a bid to cut costs after struggling to improve sales at its clothing and home division in a tough retail market.
In the first six months to September 29, cost savings led to a 2% increase in profit before tax and adjusting items to £223.5mln from £219.1mln a year ago.
Clothing and food sales drop
Total revenue, however, dropped to £4.9bn from £5.1bn a year ago with clothing and home sales down 2.7% and food sales down 0.2%.
On a like-for-like basis, UK sales declined 2.2%, clothing home sales decreased 1.1% and food sales slid 2.9%.
M&S said clothing and home sales were hit by the closure of 21 full-line stores and three outlets.
The group tried to revive the business by reducing the number of product lines, lowering prices of everyday items and focusing on “more stylish and contemporary” items, key categories like dresses, “must-have” essentials and franchises in denim, lingerie, back to school and workwear.
The company also employed TV star Holly Willoughby as its brand ambassador.
However, its turnaround plan has been thwarted by the impact of online competition and weak consumer confidence that has hurt bricks and mortar retailers in the UK.
Food sales were dragged lower by the timing of Easter, price cuts and the removal of “complex and confusing” short-term promotions, which the company said has become too reliant on in recent years.
M&S attempted to draw in customers by reducing prices on 100 everyday lines but this transition to “trusted value” hit food sales and the group expects this trend to continue in the lead up to Christmas.
Dividend unchanged as M&S says trading conditions remain challenging
The company maintained its interim dividend at 6.8p each.
Net debt fell by 12.3% to £1.78bn, reflecting tight capital expenditure control and slightly lower working capital.
On its outlook for the year, M&S said: “Trading conditions remain challenging and the headwinds from the growth of online competition and the march of the discounters remain strong in all our markets. Therefore, as we embark on the difficult early stages of transformation we are expecting little improvement in sales trajectory.”
It expects a 4% space reduction in space dedicated to the clothing and home division, compared to the 5% previously planned. Capital expenditure is estimated to reach £300mln to £350mln before disposals, down from an earlier expectation of £350mln to £400mln.
M&S left the rest of its full-year guidance unchanged.
Liberum repeated a 'sell' rating on the stock and target price of 250p, saying profit was ahead of consensus forecasts but food sales missed expectations.
"While there is limited progress on transformation, to execute major change when both sides of the business are going backwards exacerbates risk, disruption and heightens the impacts to both the profit and loss statement and cash flows," it said.
"It is also difficult to adequately invest behind, and prepare for peak trading when both businesses are deteriorating at an increasingly worse rate. The market is likely underestimating the impact on the cash and balance sheet costs associated with the ongoing reviews."