But a key revenue measure in the company's U.S. business fell for the seventh quarter in a row and came in worse than Wal-Mart's own projection, raising doubts the company can turn around its U.S. business this year.
Wal-Mart posted net income of $6.06 billion, or $1.70 per share, in the quarter ended Jan. 31. That compares with $4.76 billion, or $1.25 per share, a year earlier.
Total revenue rose 2.4 percent to $116.3 billion. Net sales, excluding membership and other income, increased 2.5 percent to $115.6 billion.
Revenue at stores opened at least a year fell 1.1 percent, dragged down by a 1.8 percent drop at the namesake discount stores, which account for more than 60 percent of its business. Analysts had expected a 0.8 percent increase, according to FactSet, but worries on Wall Street mounted in recent days after reports of a weak holiday season.
Analysts expected earnings of $1.31 per share on net sales of $117.52 billion.
"Some of the pricing and merchandising issues in Wal-Mart ran deeper than we initially expected, and they require a response that will take time to see results," CEO and President Mike Duke said in a statement.
Wal-Mart executives had told investors in November that the holiday quarter would mark the end of the streak in declining revenue, counting on a number of steps in recent months to reverse mistakes in pricing and merchandising.
Wal-Mart's funk contrasts with where it found itself at the beginning of the recession in late 2007. Unlike most stores, Wal-Mart thrived. Its core customers - households making less than $70,000 a year - bought more. Affluent shoppers became price-conscious and discovered Wal-Mart's prices were hard to beat.
Shoppers also liked that Wal-Mart's stores looked neater. The company was finishing a major renovation to address complaints that its stores were messy. But that renovation started to backfire in 2009. As part of the renovation, it had removed thousands of products from stores. Shoppers went elsewhere to find their favorite brands.
Another big mistake was pricing. Last year, the company strayed from its "everyday low prices" slogan, the bedrock philosophy of founder Sam Walton. Instead, the company slashed prices only on select products, and the deals were temporary. That confused shoppers, and gave them less confidence that they would find the cheapest prices.
Meanwhile, Wal-Mart has been squeezed by increasing competition from dollar stores, grocery chains and Target Corp., which last October began giving customers who pay with its branded credit or debit card a 5 percent discount.
Dollar stores are winning over customers with convenience, and Wal-Mart is fighting back by working with suppliers to come up with smaller packages. Wal-Mart also plans to open smaller stores in urban markets, but analysts say that Wal-Mart is moving too slow on these initiatives.
Wal-Mart's profits and its international business remained a bright spot. The company said that Wal-Mart's international business remains its growth engine and it expects growth in emerging markets to speed up.
For the fourth quarter, international sales rose almost 9 percent, while at Walmart's U.S. business, they slipped 0.5 percent, the second quarterly decline in a row. At Sam's Club, revenue increased 4.4 percent.
Wal-Mart expects first-quarter earnings per share between 91 and 96 cents. Analysts expected 96 cents per share, according to FactSet. The company also forecast that earnings for the year would be between $4.35 and $4.50 per share. Analysts expect $3.67 per share.