Tesco profits are down 54.6% since last year, its interim results revealed.
Its group profits slumped to £354m from £799m in the first half of this year.
Profits in the UK and Republic of Ireland were hit harder, slowing by 69%.
Despite the fall in profits, like for like sales have held up, only down by 1.1%.
We have delivered an unprecedented level of change in our business over the last twelve months and it is working. The first half results show sustained improvement across a broad range of key indicators.
In the UK, we continue to improve all aspects of our offer for customers, resulting in volume growth which is allowing us to create a virtuous circle of investment.
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Tesco's like-for-like sales in the UK fell by 1.3% in the three months to May 30, the supermarket giant has announced.
The figures are an improvement on the previous quarter, when sales were down by 1.7%.
In the same quarter last year the UK decline was 4%.
Like-for-like sales for the UK and the Republic of Ireland were down 1.5%, while internationally there was a 1.3% decline.
Chief Executive Dave Lewis said the results were "another step in the right direction".
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Tesco remains a "very strong business" and is doing the "right things" in working towards a recovery despite today's announcement of massive losses, an independent analyst has told ITV News.
Richard Perks, head of retail research at Mintel, pointed to recent positive signs, such as an increase in like-for-like sales in the final quarter, as a sign that new chief executive Dave Lewis was already turning the supermarket's fortunes around.
"I think they have acted impressively, really, to bring people back into those stores and shopping again," he said.
Tesco boss Dave Lewis says the supermarket's trading profit could fall further in the coming year as it makes further investments to turn around its fortunes.
The £1.4 billion trading profit was more than halved in 2014/15 after what Lewis described as a "very difficult year", and Lewis said maintaining even that level of profit was not "without its challenges".
Our aspiration is to maintain the profit level at what it was last year but you should understand that if we feel we have to make further investments to keep the momentum of the business going ... we would.
Prior to today's update, analysts said they expected Tesco to post a trading profit of around £1.48 billion in 2015/16.