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Safeway Inc. (NYSE: SWY) reported fourth-quarter and full-year 2012 results before markets opened this morning.

For the quarter, the grocery store chain posted adjusted diluted earnings per share (EPS) of $0.94 on revenues of $13.77 billion. In the same period a year ago, the company reported EPS of $0.67 on sales of $13.6 billion. Fourth-quarter results also compare to the Thomson Reuters consensus estimates for EPS of $0.76 EPS and $13.7 billion in sales.

For the full year, Safeway posted adjusted EPS of $2.15 on revenues of $44.21 billion, compared with consensus estimates calling for EPS of $2.01 on revenues of $44.09.

Adjusted results do not include a $0.12 per share benefit related to a legal settlement.

Competitor Kroger Co. (NYSE: KR) closed its fourth quarter at the end of January and is expected to post EPS of $0.70 on sales of $24.06 billion when it reports results on March 7. Last quarter, the company beat EPS estimates by three cents.

Safeway’s CEO said:

While the calendar shift of New Year’s Eve and the shift to generic drugs had a significant drag on reported ID [identical store] sales, our just for U and fuel loyalty programs are driving market share gains and profits.

The company’s same-store sales fell 0.8% in the fourth quarter due to the calendar shift and a hit of 0.7% due to generic drug sales. Higher gift and prepaid card sales led to the overall rise in revenues. Gross margins for the quarter were down year-over-year by 0.21% to 26.5%, and down 0.5% for the full year to 26.51%.

Safeway said it will issue guidance on March 6, but the consensus estimate for first-quarter EPS is $0.34 on sales of $10.14 billion. For the full year, the consensus estimates call for EPS of $2.08 on revenues of $44.9 billion.

Safeway and Kroger continue to face increasing competition from the big discount retailers like Wal-Mart Stores Inc. (NYSE: WMT) and Family Dollar Stores Inc. (NYSE: FDO) that are pushing grocery sales harder in an effort to attract more customers and sales.

Safeway’s shares are up 6.1% in the first few minutes of trading today, at $21.35 in a 52-week range is $14.73 to $22.94. Thomson Reuters had a consensus analyst price target of around $18.60 before today’s report. Once again, the analysts appear to be behind the market.