Loss before tax and after exceptional items was£45 million, compared with a£57 million profit last year.
Revenue at the retail arm was down 25.1 per cent to£311.8 million for the 24 weeks to June 10.
Over the half-year, 13 stores stopped trading and seven relocated.
The Howden Joinery business made a profit before exceptionals of£50.9 million. Total revenue was up 5.5 per cent to£272.9 million.
The group said discussions about a possible sale of the retail business were 'progressing'.
In an AGM statement in May, the furniture group revealed it had received a number of approaches from third parties interested in its retail business.
Apax, Argyll Partners and Merchant Equity Partners are all thought to be potential bidders. It is understood that MFI will have to pay the successful bidder more than£200 million to take on the retail division, which has a pension deficit of£150 million.
The company also announced the appointment of Will Samuel as non-executive director and chairman-designate. He will replace Ian Peacock, who is expected to retire in the next few months following a transition period.
Samuel, a chartered accountant, is also vice-chairman of investment bank Lazard & Co and non-executive director of the Edinburgh Investment Trust. He was previously vice chairman of the European Investment Bank of Citigroup.