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Wal-Mart's net income for the three months to the end of October rose to $2.86bn (�1.38bn), up 8% on a year ago.

The chain has cut its prices of toys and other items to try to get customers into its stores.

Not all the news from US retailers was good, as Home Depot reported a 26.8% fall in three-month profits to $1.09bn.

The home improvement chain has been hard hit by the housing downturn and predicted that full-year earnings will fall as much as 11%.

"We started the year with a more pessimistic view of the housing and home improvement market than many," said Home Depot's chief executive Frank Blake.

"It turns out we were not pessimistic enough," he added.

'Well positioned'

Home Depot shares only fell 0.1% in early trading because the retailer's outlook had already been fairly gloomy.

Wal-Mart shares were the top early gainer among New York blue chip stocks, rising 5.4% in early trading.

Wal-Mart's chief executive Lee Scott said the strategy of focusing on pricing had been working in what had been a difficult year for US consumers.

"We believe we were well positioned to win in this environment," he said.