Profits was above analysts' expectations

Wal-Mart said poor weather hit sales of clothing and garden furniture during spring and warned of tough times in the months ahead.

High energy prices are holding back consumer spending, it said, adding that this could change later in the year.

Net profits for the February-to-April period rose to $2.5bn (�1.34bn) from $2.25bn a year ago.

Analysts had expected weaker figures and were positively surprised.

Tesco threat

Operating profit in the quarter was below plan Jay Fitzsimmons, Wal-Mart treasurer

But in the UK, which accounts for 10% of Wal-Mart's sales, its Asda supermarket chain was affected by a slowdown in High Street spending.

"Operating profit in the quarter was below plan," Wal-Mart treasurer Jay Fitzsimmons said in a recorded statement.

The retailer said that like-for-like sales had increased by only a low single-digit percentage.

Total sales in the quarter had risen by a bit more, but were still at the "low end of the mid-single digit range," according to the company.

Figures released by research firm TNS earlier this month show that Tesco, the UK's biggest supermarket chain, is gaining market share at Asda's expense.

Tesco's UK market share grew to 29.8% from 29.5%, while Asda's share declined from 16.9% to 16.5%.

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Indian entry

Separately, Wal-Mart announced plans to enter the $180bn Indian retail market.

"If I have an opportunity to bring stores into the market, we will get better knowledge and close cooperation with our suppliers ... and can even accelerate the growth of our exports," said John Menzer, chief executive of Wal-Mart International after a meeting with Prime Minister Manmohan Singh.

The news comes soon after the Indian government announced plans to liberalise its domestic retail market which currently requires foreign investors to enter via franchise operations.

Several other Western retailers are also queuing up to enter the market if and when it is opened up.