Wal-Mart fears challenges ahead

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The world's biggest retailer, Wal-Mart, has reported higher quarterly profits but says this year will be challenging.

Strong sales of electronics and groceries helped raise net income for the three months to the end of January by 4% to $4.09bn (Â£2.09bn).

Sales at US stores that have been open for more than a year, known as same-store sales, were up 1.7%.

While the results were slightly better than expected, Wal-Mart said this year would present challenges.

"We know that the economy remains a critical factor in this new fiscal year," Lee Scott, Wal-Mart's chief executive, said in a statement.

"Customers were more cautious in their spending in January," he added.

That was reflected in the company's forecast for sales growth in the current quarter.

It said same-store sales growth in the US would be somewhere between 0% and 2%.

However, Wal-Mart's international division, which owns UK-based Asda, is performing well. Sales were up 19% in the first quarter to $27bn.