Wal-Mart Stores Inc. (WMT) Tuesday reported first-quarter profits rose nearly 20 percent on strong sales of low-priced food and other goods, and the world's largest retailer said it still expects a hefty rise in full-year earnings.

Wal-Mart shares were up $2.84, or more than 5 percent, at $57.88 in morning trade on the New York Stock Exchange. The opening of trading in Wal-Mart was delayed due to an imbalance of orders.

"We are experiencing a stronger economy than last year, but improvement is slower than we or all of you would like to see," Lee Scott, Wal-Mart chief executive officer, said on a recorded conference call.

Bentonville, Arkansas-based Wal-Mart reported net income for the fiscal first quarter, ended April 30, rose to $1.65 billion, or 37 cents a diluted share, from $1.38 billion, or 31 cents a diluted share, a year earlier.

First-quarter 2002 earnings benefited from a change in accounting for goodwill. Excluding the change, 2002 first-quarter earnings rose 15 percent from a year ago, Wal-Mart said on its recorded conference call.

Twenty-two analysts polled by Thomson Financial/First Call on average had expected a first-quarter profit of 36 cents a share. Estimates ranged from 35 cents to 37 cents a share.

"This looks to be an in-line quarter," Jeffrey Klinefelter, retail analyst at U.S. Bancorp Piper Jaffray, said. "They are cautiously optimistic. At this point, the economy appears to be stronger than it was last year, but the rate of improvement is slowing."

Wal-Mart's outlook was subdued, even as the U.S. Commerce Department reported that retail sales in April rose 1.2 percent, the biggest gain since last October.

Wal-Mart continued to draw growing numbers of customers from retailers like bankrupt Kmart Corp., drugstores and supermarkets, but the retailer said shoppers are still buying the lowest-priced items in product categories, weighing on profit margins.

Wal-Mart said it continues to back its previous 2002 forecast for earnings per share of $1.74 to $1.76 and sees second-quarter earnings of 43 cents to 44 cents.

Analysts on average expected Wal-Mart to report a full-year profit of $1.77 a share. Their estimates ranged from $1.75 to $1.81. For the second quarter, analysts on average expected a profit of 43 cents, according to First Call.

Wal-Mart earned $1.49 a share for the year ended Jan. 31, and 37 cents a share in the year-ago second quarter.

Wal-Mart said its sales in the first quarter rose 14.4 percent from a year earlier, to $54.96 billion. Sales at stores open at least a year rose 8.1 percent.

For the quarter, the Wal-Mart Stores segment, including Supercenters, had an operating profit of $2.55 billion, up 16 percent from $2.20 billion a year earlier. Sales at Wal-Mart stores rose 15.2 percent to $35.42 billion.

The Sam's Club warehouse segment had an operating profit of $218 million, unchanged from a year earlier. Sales at Sam's Club stores rose 11.6 percent to $7.3 billion.

Operating profits were held in check at Sam's by higher casualty and insurance costs, leading Wal-Mart to label the unit's quarterly performance "disappointing" on the conference call.

In international operations, Wal-Mart reported an operating profit of $381 million, up 77 percent from $215 million a year earlier, led by strength in its divisions in Canada, the United Kingdom and Mexico. Sales in the international division rose nearly 18 percent to $8.99 billion.

Shares of Wal-Mart have fallen 5 percent since the start of the year, on par with a 4.5 percent decline in the Standard & Poor's index of general merchandisers.