May 13 (Bloomberg) -- Wal-Mart Stores Inc., the world's largest retailer and a benchmark for the U.S. economy, posted higher first-quarter profit and said earnings may trail analysts' estimates after record gasoline prices buffeted consumers.

Sales at stores open at least a year may be unchanged in the three months through July, the retailer said today. Wal- Mart dropped $1.37, or 2.4 percent, to $56.65 at 4 p.m. in New York Stock Exchange composite trading.

The forecast may be further evidence that consumer demand is slowing, pushing the U.S. economy toward a recession. Chief Executive Officer H. Lee Scott ordered discounts as deep as 30 percent to spur demand for drugs, groceries and flat-screen televisions and lure customers to Wal-Mart, which accounts for almost a tenth of spending at U.S. retailers.

``There are still uncertainties about the rest of the year,'' Scott said today on a recorded call. ``The economy is playing a critical factor in 2008. Customers are focusing on food and daily-use items.''

Retail sales in the U.S. excluding cars rose 0.5 percent in April, more than twice what economists had forecast, a Commerce Department report showed in Washington today. Including autos, total purchases slipped 0.2 percent.

Net income increased 6.9 percent to $3.02 billion, or 76 cents a share, from $2.83 billion, or 68 cents, a year earlier, the Bentonville, Arkansas-based company said in a statement. Profit beat estimates by 1 cent. Revenue for the three months through April 30 rose 10 percent to $95.3 billion.

Second-quarter profit may be 78 cents to 81 cents a share, Wal-Mart said. Twenty analysts surveyed by Bloomberg estimated average profit of 81 cents.

`Cautious' Outlook

``In this environment, I don't think you'd want to go'' higher with the forecast, Joseph Feldman, managing director at Telsey Advisory Group in New York, said in a Bloomberg Television interview. ``It makes sense you'd be cautious.''

Separately, TJX, the owner of the Marshalls and TJ Maxx discount chains, said net income climbed 20 percent to $193.8 million as sales rose 6.2 percent to $4.36 billion. The retailer also fell in New York trading after forecasting second-quarter profit that may trail estimates.

Same-store sales at U.S. retailers will probably advance 2 percent in May as consumers spend tax rebates, the International Council of Shopping Centers said in a statement. Wal-Mart sales may climb at that pace, the retailer said May 8.

`Great Quarter'

``Wal-Mart had a nice quarter,'' Michael Binger, a portfolio manager for Thrivent Financial for Lutherans, which has $73 billion in assets under management, said in a Bloomberg Television interview. ``In reality, in this environment, it was a great quarter. I would be a buyer on this dip.''

Wal-Mart has gained 19 percent in trading this year. Sustaining that pace for all of 2008 would result in the best performance by the stock in nine years. Wal-Mart is the second- biggest gainer in the 40-company Standard & Poor's 500 Consumer Staples Index after chewing gum maker Wm. Wrigley Jr. Co., which Mars Inc. agreed to buy for $23 billion last month.

Twenty-four analysts estimated first-quarter profit at Wal-Mart of 75 cents a share. Sales rose 10 percent to $94.1 billion, slightly higher than the company's preliminary statement last week.

The retailer said last month it expected to earn 74 cents to 76 cents a share in the first quarter after marking down less merchandise for clearance sales, helping to widen profit margins. Wal-Mart had forecast 70 cents to 74 cents previously.

Second Quarter

A year ago, the sale of real estate and other gains boosted second-quarter earnings by 4 cents a share. Subtracting that gain indicates profit of 72 cents.

The 2008 second-quarter forecast of as much as 81 cents ``represents a continuation of good year-over-year profit,'' Chief Financial Officer Thomas Schoewe said in a telephone interview. ``We think the guidance is appropriately conservative.''

The average U.S. pump price for regular gasoline rose 10.9 cents to a record $3.722 a gallon in the week ended yesterday, the U.S. Energy Department said. It was the seventh consecutive week of record prices.

Job losses, falling home values and higher food prices also are squeezing consumers.

Price cuts by Wal-Mart in late April targeted U.S. taxpayers who are receiving $117 billion in rebate checks. The retailer is cashing the checks for free and reducing shampoo, cereal and luncheon meat prices.

According to a Bloomberg News survey of economists, the rebates won't prevent the U.S. economy from stagnating in the second quarter.

``Even with this rebate, I don't think we're going to see much on the consumer spending side,'' UBS Securities LLC chief U.S. economist Maury Harris said in an interview with Bloomberg Television.

Household Spending

The economy will grow at a 0.1 percent annual rate from April to June, the least since the 2001 recession, according to the median estimate of 54 economists surveyed from May 2 to May 8. Household spending may rise at a 0.5 percent pace, half the first quarter's gain and the smallest increase in 17 years.

``Price matters more than it did last year,'' U.S. Stores Chief Eduardo Castro-Wright said on the call.

Wal-Mart increased traffic to its U.S. stores for the first time in more than two years as consumers sought lower prices, said Schoewe. The additional visits boosted comparable- store sales by 2.7 percent, the best performance in eight quarters.

Wal-Mart customers spent an average 2.4 percent more per transaction, reflecting a consolidation of shopping trips.

Higher Stress

``Clearly there is a higher stress related to higher gas prices, higher food prices and less disposable income,'' Schoewe, 55, said from Bentonville. ``The customer is very concerned about filling up their gas tank, so rather than coming to visit two times a week, maybe they'll visit once and load up the basket.''

Wal-Mart is in the final year of a three-year restructuring plan that's slowed the growth of U.S. stores to focus on distribution, information systems and merchandising to boost profit with fewer clearance markdowns.

A week ago, Wal-Mart expanded its $4-a-month drug offering with three-month prescriptions for $10, causing Target to respond with similar discounts.

Sales at stores open at least a year at Minneapolis-based Target rose 3.1 percent in April, below its projection and less than Wal-Mart's gain of 3.2 percent. Target plans to report quarterly results on May 20.

Costco, the largest U.S. warehouse-club chain, said last week that April comparable-store sales rose 8 percent.

Market Share

``Wal-Mart, Target and Costco are all continuing to gain market share in this environment,'' Susan Kahn, a Target spokeswoman, said yesterday in a telephone interview. They're probably taking shoppers from retailers with falling comparable-store sales, she said.

Macy's, which doesn't report monthly sales, said in February that quarterly same-store sales dropped 2 percent. Sears also posted a quarterly drop, with sales at Sears outlets open at least a year falling 4 percent and at Kmart stores declining 5.2 percent.

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

Last Updated: May 13, 2008 16:14 EDT