The firm said annual profits will "not exceed £1.4bn", which is below the £1.8bn to £2.2bn range forecast by analysts and even further below the £2.4bn to £2.5bn the retailer itself forecast in August.
Today's announcement marks the fourth profit warning Tesco has issued in the last year and it has wiped around £2bn off Tesco's market valuation this morning.
The news comes in the wake of an accountancy scandal surrounding an admission by the group that it had overstated profits by £263m, which has led to the suspension of eight senior execs and was instrumental in the resignation of chairman Sir Richard Broadbent in October.
Chief executive Dave Lewis, who joined the once seemingly unstoppable retail giant on 1 September, attributed the hit to "new policies and procedures". New steps have been introduced, including management changes and investing to "improve our customer offer".
The group said it was working to establish "stronger long-term relationships with our suppliers, benefitting customers".
Lewis said: "Whilst the steps we are taking to achieve this are impacting short-term profitability, they are essential to restoring the health of our business.
"We will not engage in short term actions that compromise in any way our offer for customers.
"Our priorities remain restoring competitiveness in the UK, protecting and strengthening the balance sheet and rebuilding trust and transparency.
"For now, all the Tesco team is focused on delivering the best Christmas for customers."
The firm also recently announced a restructure of its senior management. Multichannel director Robin Terrell has taken the top marketing job as head of customer, taking over from Jill Easterbrook, who had only been in the role for a few months.
In this morning’s trading update, Tesco said it would detail its plans to improve competitiveness on 8 January.