The disappointing results are the first to be presented by Justin King, the supermarket’s new chief executive, who faces a battle to revive sales.
King said the company needed to re-focus its efforts on customer needs and indicated that Sainsbury's would be using price cuts to win back market share from rivals.
He said: "Our job is to provide even better quality products at good value prices. We made our first moves on pricing earlier this month and customers are already seeing the benefit in their shopping baskets."
With the announcement of the results Sainsbury’s has also unveiled further management changes.
Stuart Mitchell, managing director of its main supermarket business, is to step down so King can have more control over day-to-day operations.
Sir Peter Davis, the store’s chairman, said this year has been one of tremendous change. Sainsbury's sold Shaw's, its US supermarket business, to focus on UK interests, and has bought Bells Stores, a chain of 54 convenience stores. He said: "The scale of change and the associated disruption in Sainsbury's supermarkets and the weakening of the dollar have impacted on our results for the year."
Sir Peter, meanwhile, has agreed to go part-time from July, taking a pay cut to reflect his reduced role.
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