Cash-strapped Americans have helped Wal-Mart to unveil better-than-expected profits and to raise the group's full-year outlook as shoppers turned to the world's biggest retailer to make their dollars stretch further.

Wal-Mart said profits in the three months to July 31 rose 17 per cent to $3.45 billion (£1.8 billion) and that increased demand from shoppers had led it to raise its full-year profit outlook.

Amid surging gasoline prices - the cost of fuel has doubled in two years in many states - rising food costs, and around 380,000 Americans losing their jobs a week, discount retailers such as Wal-Mart have seen increased business.

Net sales for the second quarter rose 10.4 per cent to $101.6 billion. Like-for-like sales in the period, excluding the sale of gasoline, rose 4.5 per cent.

However, today's second-quarter results will reignite doubts among Wall Street's economists after the retailer issued a cautious warning for its performance during the current quarter of the year.

It claimed that it may suffer in the three months because much of the tax rebates returned to Americans in May and June have been spent.

Earlier this summer, President Bush gave back $168 billion to taxpayers to try to stimulate consumer spending, effectively trying to buy America out of a recession. Wal-Mart benefited from the rebates with initiatives, such as offering to cash rebate cheques in its stores for free if the funds were spent at the retailer.

Lee Scott, chief executive at the Arkansas-based company, said: "We have improved customer traffic and ticket and overall sales growth in our markets. While inflation and higher fuel costs are pressuring suppliers, retailers and customers worldwide, we’re confident that Wal-Mart is well positioned for this economy."

Wal-Mart has spent the past two years altering its business model to prepare for a sharp economic slowdown in the US. It increased the range of products that it discounted to include those that typically wealthier customers would have bought elsewhere.

This year, Wal-Mart launched a big advertising campaign in the US flagging the low cost of laptops for schoolchildren, with basic computers starting at $299 each.

Shares in Wal-Mart were down 0.9 per cent at $57.36 in early trading, having risen from $44 this time last year.

Times Recommends

• Tories’ green bank to revolutionise power policy
• UK car industry receives £2.6bn injection
• Pru chief turns down seat on board of bank