Profit rose to $307.9 million, or 69 cents a share, in the fourth quarter ended on Dec. 30, from $173.5 million, or 39 cents a share, a year earlier.
Net income in the latest quarter included tax benefits of 8 cents a share, the Pleasanton, California-based company said.
Analysts on average expected Safeway, whose chains include Vons and Dominick's, to earn 60 cents per share, according to Reuters Estimates.
Sales rose almost 4% to $12.5 billion, but missed analysts' expectations of $12.64 billion.
Identical-store sales, including and excluding fuel, increased 3.5% in the quarter. Identical-store sales exclude new or replacement stores.
Safeway said it still expected fiscal 2007 earnings of $1.90 to $2 per share. Analysts on average are expecting $1.95, according to Reuters Estimates.