The stock of other British supermarkets also fell sharply on Monday, following Tesco's announcement.
Read MoreUK grocery market growth plummets to 10-year low
Tesco's trading profit for 2014/2015 is now expected to be between £2.4 billion ($3.98 billion) and £2.5 billion, the supermarket said on Friday, compared to analyst consensus of between £2.7 and £2.8 billion. Tesco's website, however, shows analyst expectations of around £3 billion.
Tesco also said its capital expenditure would be cut, and its interim dividend would likely be set at 1.16p per share - a 75 percent reduction from last year.
"The combination of challenging trading conditions and ongoing investment in our customer offer has continued to impact the expected financial performance of the group," Tesco said in a statement. "The business continues to face a number of uncertainties, including market conditions and the pace at which benefits from the investments we are making flow through in the second half and consequently the board has revised its outlook for the full year."