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

Shares in the world's largest retailer rose 3.5 percent on the results, as investors shrugged off fears of a deeper global recession that prompted stock declines in the wider U.S. market.

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.

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.

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 that 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.

SAM WALTON'S TIME

Wal-Mart's sales have been outpacing competitors in the past year as consumers adopt a frugal mind-set and try to stretch limited budgets by shopping in its stores for necessities like food and medicine.

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

The business model that Sam Walton created is perfectly positioned for the environment we live in now, Duke said on a recorded call, referring to the company's founder.

I do believe this is Wal-Mart's time.

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.

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, the company said sales of big ticket items, like furniture and jewelry, remain under pressure.

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

Chief Financial Officer Tom Schoewe said he now expects capital expenditures for the current fiscal year to be in the 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 restart buying back shares this year.

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.

(Editing by Maureen Bavdek)

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