Nov. 12 (Bloomberg) -- Wal-Mart Stores Inc., the world’s largest retailer, reported third-quarter profit rose 3.2 percent, helped by inventory reductions, and forecast U.S. sales for the fourth quarter would be little changed.

Net income increased to $3.24 billion, or 84 cents a share, in the period ended Oct. 31, from $3.14 billion, or 80 cents, a year earlier, the Bentonville, Arkansas-based company said today in a statement. Analysts predicted earnings of 81 cents, the average of 24 estimates compiled by Bloomberg.

Walmart Chief Executive Officer Mike Duke cut inventory 4.1 percent and accelerated efforts to curb expenses as falling food prices and the worst U.S. unemployment rate in 26 years muted revenue. Sales at U.S. stores open at least a year declined 0.4 percent in the quarter, missing Walmart’s projection that same- store sales would be unchanged to up 2 percent.

“They’re managing around their soft sales,” Howard Davidowitz, chairman of Davidowitz & Associates Inc., a New York-based retail consulting and investment banking firm, said today by telephone. “If they don’t get higher same-store sales, then earnings will not be sustainable.”

Walmart advanced 27 cents to $53.24 at 4 p.m. in New York Stock Exchange composite trading. The shares have slumped 5 percent this year.

Kohl’s Corp., the fourth-largest U.S. department-store chain, also reported third-quarter earnings today and raised its full-year forecast. The stock gained 5 cents to $54.64.

Forecast

Walmart’s revenue for the third quarter advanced 1.1 percent to $99.4 billion. The company raised its full-year profit forecast to $3.57 to $3.61 from its August projection of $3.50 to $3.60. Analysts projected $3.58 on average.

For the fourth quarter, Walmart said it expects comparable sales to be “flat, plus or minus 1 percent,” compared to an increase of 2.4 percent a year earlier.

“While the economy remains challenging for our customers and therefore for Walmart sales, I continue to be encouraged by both our traffic and market share gains,” Duke, 59, said on a pre-recorded conference call. He reiterated that Walmart expects to keep shoppers. “When the recession is behind us, we believe people will continue to shop with a new instinct for value.”

Kohl’s Earnings

At Menomonee Falls, Wisconsin-based Kohl’s, third-quarter net income rose 21 percent to $193 million, or 63 cents a share, from $160 million, or 52 cents, a year earlier. That beat the average estimate of 18 analysts surveyed by Bloomberg by 2 cents. Sales at stores open at least a year, considered a key measure of retail performance, rose 2.4 percent.

Kohl’s said it now expects to earn between $2.98 and $3.08 a share for the year and as much as $1.24 in the current quarter. Eighteen analysts surveyed by Bloomberg predict $3.04 for the year and $1.23 for the fourth quarter, on average.

The U.S. jobless rate will exceed 10 percent through the first half of 2010, according to a monthly Bloomberg News survey of economists. The rate jumped to 10.2 percent in October, the highest level since 1983, according to a Labor Department report on Nov. 6.

Lower food prices reflect a global oversupply of meat and milk during the recession. Meat costs, excluding poultry, may rise as much as 0.5 percent or fall that much this year, the U.S. Department of Agriculture said last month. It predicted price drops of 6 percent to 7 percent for dairy products and declines of 0.5 percent to 1.5 percent for fresh fruits and vegetables.

(Walmart executives discussed results on a pre-recorded call today. U.S. and Canadian callers should dial 1 800-778- 6902; others call 1-585-219-6420.)

To contact the reporter on this story: Chris Burritt in Greensboro, North Carolina, at cburritt@bloomberg.net

Last Updated: November 12, 2009 16:13 EST