Safeway Inc. reported a fourth quarter loss of $1.61 billion, or $4.06 a share, compared to net income in the same period last year of $338 million, or 79 cents a share as the grocery-store company's sales continued to remain weak.

Excluding the write-downs, the latest quarter's profit would have been 53 cents.

It shares reported a fall of 5.4% at $22.23 premarket. Through Wednesday, the stock had grown about 15% in the past year, well below the broader market.

"Despite very challenging economic conditions, Safeway generated free cash flow of $1.5 billion in 2009. This exceeded our expectations and is the highest annual free cash flow ever achieved by Safeway," said the company, the largest grocery chain in the Silicon Valley.

Moreover, its revenue plunged by 8.1% to $12.7 billion on a 4.1% drop in same-store sales excluding fuel and an additional week of sales the previous year.

However, analysts surveyed by Thomson Reuters speculated its earnings to be 53 cents and revenue of $12.62 billion.

Safeway operates 1,725 stores in the U. S. and Canada, including regional chains Vons, Randalls, Tom Thumb, Genuardi's and Carrs.