Shares in US retailer Safeway Inc rose today (24 February) after the company reported higher fourth-quarter revenue, as the decline in its identical-store sales eased.

Safeway’s stock was up 2.4% at $22.57 at 09:59 ET today as the retailer also posted better underlying profits for the fourth quarter.

Safeway said its total sales for the fourth quarter to 1 January stood at US$12.8bn, up from $12.7bn a year earlier.

The retailer’s top line was boosted by higher fuel sales and a stronger Canadian dollar but, notably, although its identical-store sales, excluding fuel, were down, the fall was not as pronounced as the previous quarter.

Safeway’s identical-store sales, excluding fuel, were down 0.8% in the fourth quarter. In the third quarter of the year, sales fell by 2% on the same metric.

The company reported a fourth-quarter net income of $229.6m, against a net loss of $1.61bn recorded in the fourth quarter of 2009 when its bottom line was hit by an impairment charge. If that cost is excluded, Safeway’s net income in the fourth quarter of 2009 was $209.1m.

“We are pleased with the improving trends in sales in 2010, driven by our price reductions, reinvigorated private-label brands and targeted marketing. These trends have continued into the first quarter of 2011,” said Safeway chairman, president and CEO Steve Burd. “We are also encouraged by the results of our efforts to achieve cost reduction, especially in shrink and store-level efficiencies, as well as our strong annual free cash flow.”

Over 2010 as a whole, Safeway’s revenue was up – $41.05bn versus $40.85bn in 2009 – but its net income, excluding the impairment charge, fell from $720.7m in 2009 to $589.8m in 2010.

Click here for the complete statement from Safeway and click here for Steve Burd’s comments on the retailer’s moves to pass on rising food prices to consumers.