Ahead of its scheduled update due at the start of October, the group said the “combination of challenging trading conditions and ongoing investment in our customer offer” has continued to impact the group’s performance.

As a result, the board has revised its outlook for the full year, as well as taking an axe to its dividend.

In reaction, shares tumbled around 10 per cent at the opening bell, falling as low as 222p, before settling down 8.5 per cent at 225p.

Other supermarkets were also under the cosh as a result, with Morrisons, Sainsbury and Marks & Spencer all down between 3-4 per cent.

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Tesco, the UK’s largest supermarket, has been under increasing pressure from discount retailers such as Aldi and Lidl, and said this morning it continued to face “uncertainties”.

It said: “We now expect trading profit for 2014/15 to be in the range of £2.4bn to £2.5bn. Trading profit for the six months ending 23 August 2014 is expected to be in the region of £1.1bn.”

As well as revising down profits, Tesco said the interim dividend would be slashed by 75 per cent to 1.16p a share, as the group focuses on “maintaining a strong financial position in order to maximise its business and strategic optionality.”

More worryingly, it is also slowing its planned overhaul of its stores, in an effort to cut its cap-ex. The group said: “In addition, we are implementing further reductions in capital expenditure. For the current financial year capital expenditure will now be no more than £2.1bn, some £0.4bn less than originally planned and a reduction of £0.6bn from the previous financial year.

“This will be achieved in a number of areas including IT and the slower roll-out of our store refresh programme.”

Tesco has also sped up the process of hiring new chief executive Dave Lewis, who will now join Tesco at the start of September, when he will launch a review into “all aspects of the Group in order to improve its competitive position and deliver attractive, sustainable returns for shareholders.”

Sir Richard Broadbent, Chairman, said: “The board’s priority is to improve the performance of the Group.

“We have taken prudent and decisive action solely to that end. Our new chief executive, Dave Lewis, will now be joining the business on Monday and will be reviewing every aspect of the Group’s operations. This will include consideration of all options that create value for customers and shareholders.

The actions announced today regarding capital expenditure and, in particular, dividends have not been taken lightly. They are considered steps which enable us to retain a strong financial position and strategic optionality.”