Morrisons has reported a £176 million loss for the year to the end of February - down from a profit of £879 million the year before.
According to the BBC, the UK's fourth largest supermarket is going to restructure to target the market between discounters and the 'big four' supermarkets.
And, it warned that profits in the coming year would be less than £375 million, about half the level of last year.
Chairman Sir Ian Gibson told the BBC it had been a 'disappointing year for Morrisons', as turnover had fallen by 2 per cent.
Chief executive Dalton Philips, added: 'The fact is there are new entrants into the market - they're called the discounters. Customers do shop in them, and we're going to recognise that.
'There is a tipping point where the price perception gap has just widened too far between the discounters and the big four, and we're going to address that.
'We have identified over a billion pounds that we can take out of our business now, and that billion pounds is going to be invested back into our proposition to get those lower prices for our customers.'
Several years behind its rivals, Morrisons only started online shopping deliveries (through Ocado) in January of this year, and has been slow to recognise the move from big out-of-town stores to local convenience stores. This latter point, though, is something the chain is trying to rectify this year, pressing ahead with the opening of convenience stores across the UK.
The BBC also reported that Morrisons was hit by a one-off £903 million exceptional write-down in the last financial year, due to property and IT costs, and a disappointing performance from Kiddicare, its baby products business.
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