May 14 (Bloomberg) -- Wal-Mart Stores Inc., the world's largest retailer, probably will report that profit growth slowed as cooler weather and rising gasoline prices led to the smallest sales gain in four years.

Net income in the first quarter ended April 30 climbed 6.8 percent to $2.79 billion, or 68 cents a share, according to the average estimate of 19 analysts surveyed by Bloomberg. Sales will be about $85.4 billion, a 7.3 percent increase from a year earlier, Wal-Mart said May 10.

Gasoline prices advanced 34 percent since February to an average $3.05 a gallon in the week ended May 7, and the coldest April in the U.S. since 1997 curbed sales of warm-weather clothing. Chief Executive Officer H. Lee Scott boosted advertising to promote low prices after Wal-Mart failed to lure customers with more fashionable sweaters and home goods.

``You want to make sure that the marginal customer really stays with you,'' said David Abella, an analyst at Rochdale Investment Management in New York. Wal-Mart needs a ``time out'' from upgrading merchandise to reassure shoppers about its prices, he said.

Shares of Wal-Mart, based in Bentonville, Arkansas, rose 6 cents to $47.84 at 4 p.m. in composite trading on the New York Stock Exchange. They climbed 0.9 percent in the past year, compared with a 9.4 percent gain in the Standard & Poor's 500 Retailing Index.

`A Challenge'

Wal-Mart is scheduled to report earnings tomorrow before the opening of New York Stock Exchange trading.

A 7.3 percent sales increase would be the smallest since the three months that ended January 2003. Wal-Mart on May 10 reported a 3.5 percent decline in April sales at its older stores, its worst monthly performance in at least 28 years.

The retailer's profit growth would be the slowest since the second quarter of 2006, when the company posted a 26 percent drop after exiting Germany.

Sales at 53 U.S. retail chains fell a combined 2.4 percent in April, the International Council of Shopping Centers said last week. That was the biggest drop since the New York-based trade group started keeping records in 1970.

The retailer will find meeting its first-quarter profit forecast of 68 cents to 71 cents a share ``a challenge'' because of the ``tough sales environment'' in April, Chief Financial Officer Tom Schoewe said in a statement on April 12.

Wal-Mart shoppers have an average household income of $40,000, less than customers of rival Target Corp., and are more likely to curb spending when gasoline prices rise, analyst Abella said.

Scott, 58, declined to be interviewed, spokeswoman Mona Williams said.

`Disappointing' Fashion Sales

Wal-Mart's sales of more-expensive clothing and home goods such as 600-threadcount sheets have been less than the company anticipated. The retailer is removing its Metro 7 clothing, aimed at more fashion-conscious shoppers, from about half of the 1,500 stores that carried it.

Shoppers can find fashionable clothing and well-made goods for comparable prices elsewhere, said Patricia Edwards, a Seattle-based money manager at Wentworth, Hauser & Violich who owns both Target and Wal-Mart shares.

Target has been successful selling its own brands of clothing and home goods by designers such as Isaac Mizrahi and Michael Graves.

``The difference in price between buying a cute top at Target and a basic top at Wal-Mart is not that great,'' Edwards said.

Wal-Mart, with more than 4,000 supercenters, discount stores and Sam's Clubs in the U.S., has looked to international locations to provide a third of its sales and profit growth.

Sales in foreign countries such as the U.K. and Mexico probably rose 19 percent to $20.6 billion, estimated Deborah Weinswig, an analyst with Citigroup Inc. in New York who has a ``buy'' rating on Wal-Mart's shares.

To contact the reporter on this story: Lauren Coleman-Lochner in New York at llochner@bloomberg.net.

Last Updated: May 14, 2007 16:39 EDT