Wal-Mart today hailed the success of a return to its value roots as it beat profit forecasts for the fourth quarter of its financial year and claimed Asda was the best performing supermarket in the UK.

The US group, the world’s biggest retailer, surprised analysts with a 4 per cent rise in net income to $4.096 billion for the three months to January 31. Sales hit $106.27 billion compared with $98.09 billion last year.

Lee Scott, the president and chief executive, said that Wal-Mart was benefiting from customers’ caution in the current economic climate.

The retailer has been trying to improve sales in the US by focusing far more on its traditional core lower income customer. It launched a Christmas price cutting campaign on toys on September 30.

Mr Scott said: “We know that the economy remains a critical factor in this new fiscal year. Customers were more cautious with their spending in January.”

Wal-Mart said that Asda had beaten both its sales and profit forecasts in the financial year to January 31 with like-for-like sales in the “mid single digits”.

While Morrisons was the best performing supermarket in the UK over Christmas, Wal-Mart said that Asda had been the big winner through 2007 as a whole and had added two million customers in the past 24 months.

Mike Duke, Wal-Mart's vice-chairman, said: “During the year Asda was the fastest growing of the big four retailers. In fact, Asda achieved above-market average growth every single month this year.”

It marks a further vindication of the turnaround strategy put in place by Andy Bond, Asda's chief executive, since he took over three years ago.

Asda missed a series of profit targets in 2005, prompting Mr Bond to say that the chain had lost touch with its traditional customer.

Today, he said: “2007 was a vintage year for Asda. Although 2008 will be a tougher year for consumers, with increasing energy costs and inflationary pressures on core items, we, along with other retailers, have a responsibility to keep a lid on inflation.

"We will continue to be the undisputed price leader in the UK, aggressively rolling back prices by focusing on reducing our costs. We will also be challenging our suppliers to do the same. Together we must ensure we make it as easy as possible for hard pressed shoppers to make ends meet."

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