Wal-Mart, the world's biggest retailer, posted a 13 per cent rise in quarterly profit on Tuesday and brightened its full-year outlook, raising retailers' hopes for a merry Christmas.
But some analysts remained unconvinced, with lingering high oil prices and cost pressures weighing on Wal-Mart and other retailers ahead of the crucial holiday spending season.
Wal-Mart chief executive Mr Lee Scott said the economy was continuing to pick up, and with oil prices easing and an improvement in the labour market, he was more optimistic about the crucial Thanksgiving-to-Christmas period.
Sales rose 9.7 per cent to $68.5 billion - its slowest growth rate in more than 18 months. Sales at US stores open at least a year - a key gauge of retail strength known as same-store sales - only inched up 1.7 per cent.
Performance of the company's namesake Wal-Mart stores was weak, with the company saying were customers hurt by high oil prices.
The fast-growing international division posted an 18-per cent increase in sales to $13.55 billion, with good results in Mexico, Puerto Rico and Argentina.
Mr Scott said Wal-Mart, regarded as a bellwether of the US economy, was more optimistic about the rest of the year, with its fashions selling well and food sales good.