NEW YORK - Wal-Mart Stores Inc posted a profit that beat Wall Street forecasts, fueled by sales at its namesake U.S. discount stores, and said it expects to outperform rivals as a global downturn forces shoppers to seek low prices.

Shares in the world's largest retailer rose 3 percent on the results, as investors shrugged off fears of a deeper global recession that prompted stock declines in the wider U.S. market.

They kind of did everything right, said Joseph Feldman, a retail analyst with Telsey Advisory Group. They're going to start buying back stock, they continue to control inventory well, February is off to a good start, and guidance for next year is as good as you could have hoped.

Wal-Mart said U.S. sales rose 6 percent in the quarter as it attracted more shoppers trying to save money. International sales slid 8.4 percent due to a stronger U.S. dollar, while sales at its Sam's Club warehouse clubs were flat.

Wal-Mart's sales have been outpacing direct competitors like Target Corp and Costco as well as lower-priced department stores like J.C. Penney in recent months as consumers stretch limited budgets by shopping in its stores for necessities like food and medicine.

Our performance relative to competitors was exceptionally strong in the fourth quarter and throughout the year, Chief Executive Mike Duke said in a statement. We expect this momentum to continue.

Profit fell to $3.79 billion, or 96 cents per share, for its fiscal fourth quarter, ended January 31, from $4.096 billion, or $1.02 share, a year ago.

Excluding a 7 cent charge per share for the settlement of class-action lawsuits, earnings came to $1.03 per share. Analysts, on average, had expected the company to earn 99 cents per share, according to Reuters Estimates.

Chief Financial Officer Tom Schoewe said in an interview that strong U.S. sales in January and a lower tax rate contributed to the better-than-expected results.

SAM WALTON'S TIME

To win business during the fourth quarter, which included the crucial holiday sales season, Wal-Mart said it spent more on advertising to tout its low prices.

These guys are gaining share and doing much better than their competitors, said Christian Andreach, a managing director at money management firm Manning & Napier Advisors. Even in the discount channel, they're doing very well.

Quarterly net sales rose 1.7 percent to $108 billion.

Sales at U.S. stores open at least a year rose 2.8 percent overall, with increases of 2.8 percent at the company's namesake stores and 2.5 percent at the Sam's Club division.

The business model that Sam Walton created is perfectly positioned for the environment we live in now, Duke said, referring to the company's founder. I do believe this is Wal-Mart's time.

Duke said that after a strong performance in January, business in February was off to a good start.

Wal-Mart U.S. CEO Eduardo Castro-Wright said on the call that families are eating at home more often, spurring demand for groceries as well as items used for home cooking and entertaining.

At its Sam's Club stores, sales of big ticket items, like furniture and jewelry, remain under pressure, the company said.

'WAY MORE DIFFICULT' TO FORECAST

Wal-Mart said it will keep a close eye on expenses so it can continue to try to keep its prices lower than rivals.

Schoewe now expects capital expenditures for the current fiscal year in a range of $12.5 billion to $13.5 billion, down from an earlier view of $13 billion to $14.5 billion.

The retailer also said that while it stopped buying back shares in the fourth quarter, it believes it is appropriate to resume those purchases.

Schoewe said it is way more difficult now than at any time he can remember to provide earnings forecasts, given the uncertain economic climate.

For the first quarter, Wal-Mart forecast earnings of 72 to 77 cents per share, with full-year earnings of $3.45 to $3.60. Analysts had forecast 77 cents per share for the first quarter and $3.57 for the year.

Wal-Mart said its forecast assumes currency exchange rates will hurt full-year results by about 13 cents per share.

Wal-Mart shares rose 3 percent, or $1.39 to $47.92 in late morning trading.

(Editing by Maureen Bavdek and Brian Moss)

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