Wal-Mart sales rise to $99.1 billion

NEW YORK (CNNMoney.com) -- Wal-Mart reported record first-quarter sales and profits Tuesday that beat analyst expectations. Shares of the world's largest retailer rose more than 2% on the news.

Bentonville, Ark.-based Wal-Mart (WMT, Fortune 500) posted net income of $3.3 billion, or 88 cents per share, up 10% from $3.0 billion, or 77 cents per share a year ago. Analysts surveyed by Thomson Reuters were expecting a profit of 85 cents per share.

Sales rose 6% to $99.1 billion, which beat analysts' forecasts of $98.45 billion

While total sales were up, Wal-mart's sales at it stores open at least a year -- a key gauge of a retailer's performance known as same-store sales -- fell 1.4% in the three months ending April 30. Same-store sales rose 3.6% in the same period a year ago.

The first-quarter drop follows a 1.6% decline in same-store sales during Wal-Mart's fourth quarter, a key period including year-end holiday sales.

"A number of economic pressures, including gas prices and ongoing concerns about unemployment, continue to affect key segments of retail, and this is especially true for Wal-mart's core customer," Wal-Mart president and chief executive officer Mike Duke said in a pre-recorded call with investors.

Eduardo Castro-Wright, vice-chairman of Wal-Mart stores, added during the call that the still weak economy caused consumers to change their spending patterns.

Sales in the company's pharmacy and do-it-yourself automotive categories were strong, he said, but entertainment and apparel sales disappointed. Grocery sales were mixed.

Still, Wal-Mart issued guidance for the second quarter that's roughly in line with forecasts. It said it expects its earnings per share for the quarter to range from 93 cents to 98 cents. Analysts currently expect a profit of 98 cents per share for the quarter.

Bernie Sosnick, a retail analyst with Gilford Securities, said he thinks Wal-Mart earnings will be at the higher end of its forecast in its next quarter, due to general improvements in the economy.

High unemployment, high gas prices and lower food prices were beyond the company's control in the last year, and yet Wal-Mart still turned a profit despite lackluster sales. Once the economy turns a corner, Sosnick said, Wal-Mart's same-store sales are likely to show some improvement.

Meanwhile, Wal-Mart's international operations -- including Brazil and China -- continued to post strong levels of growth. Wal-Mart International posted $25 billion in sales in the quarter, up 21.4% from a year ago.

"It's important to consider how Wal-Mart has been able to deliver very strong earnings in places like Mexico," Sosnick said. "It's a company that is becoming increasingly diversified."

Because Wal-Mart averages more than 100 million shoppers in its stores each week and generates more than $400 billion in annual sales, analysts look to the mega retailer's earnings as a key measure of consumer spending and the overall health of the economy.

Home improvement retailer Home Depot (HD, Fortune 500) also reported earnings that beat analyst expectations Tuesday morning. Rival retailer Target Corp (TGT, Fortune 500). is scheduled to report its first-quarter results before the stock market opens Wednesday.