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Tesco's shocking result follows write downs of more than $10 billion due to a heavy fall in the value of its property, and the cost of store closures at the U.K.'s largest supermarket group. Hefty pension liabilities were another drag.
The firm has been slugged by competition from low price chains, and an accounting scandal in which it admitted to overstating its profit forecasts.
"The results we have published today reflect a deterioration in the market and, more significantly, an erosion of our competitiveness over recent years," Chief Executive Dave Lewis said in a statement.
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The group has also had trouble overseas. Tesco struggled to go it alone in China and its joint venture with a state-owned company was another loss-maker during the past year. The U.K. retailer pulled out of its failed foray into the U.S. in 2012.
Tesco shares were down 5% in London trading.