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Wal-Mart Stores Inc.'s (WMT) fiscal first-quarter profit rose 3% on international strength while U.S. operations continued to struggle.

The world's biggest retailer also saw its bottom line impacted by higher product costs and interest expenses.

Comparable store sales at Wal-Mart's U.S. stores, by far the company's biggest unit, fell for the eighth straight quarter, with the decline attributable to a combination of Wal-Mart still working on its merchandising strategy and the company seeing a reluctance by consumers to shop. Rising gasoline prices and continued high unemployment are serving as a damper for Wal-Mart's lower-income customers, with the retailer saying fewer of them came in during the first quarter.

"Despite improvements in some areas of the economy, core Wal-Mart U.S. customers are still stretched," Chief Executive Mike Duke said on a conference call.

As a result, same-store sales at U.S. stores dropped by 1.1% in the first quarter. Wal-Mart gave guidance for a 1% rise to a 1% decline for the current quarter, reflecting continued uncertainty about customers. The company is also trying to gain traction with efforts that include bringing more merchandise back into stores and reemphasizing an "every day low price" strategy.

Bill Simon, head of Wal-Mart's U.S. operation, said that progress is being made, with the U.S. grocery business showing low single-digit percentage growth for the quarter. Also, "Customers are responding positively as we expand our merchandise assortment, adding back items across all categories," Simon said.

The company has also opened several Wal-Mart Express stores as pilots in rural and urban areas in the U.S., with the goal of having 15 to 20 stores by the end of the year. The new format's size averages just 15,000 square feet and offers fresh foods and general merchandise, a way to complement existing mammoth-sized Wal-Marts and go up against dollar stores that have been taking business from the retailer.

Wal-Mart also operates Sam's Club warehouse clubs in the U.S., with the unit's sales gains coming in well above estimates, while 7% operating-income growth led the company's divisions.

While seeing mixed performance in the U.S., the world's largest retailer has grown earnings with significant aid from its international business. In the first quarter, "all of our markets had encouraging comparable-store sales results," with Mexico, China, and Chile having the highest comps, said Doug McMillon, head of international operations.

Meanwhile, Wal-Mart on Monday threatened to walk away from a proposed $2.4 billion acquisition of South African retailer Massmart if conditions are imposed following recommendations by the country's Competition Commission. The deal is important for Wal-Mart as it seeks a foothold to tap into Africa's growing consumer class.

For the quarter ended April 30, Wal-Mart posted a profit of $3.4 billion, or 97 cents a share, up from $3.3 billion, or 87 cents a share, a year earlier. Discontinued operations cut the latest result by a penny. In February, the company had forecast a profit of 91 cents to 96 cents a share. Profit growth occurred on lower overhead and income taxes while earnings per share increased more markedly thanks to share buybacks reducing stock outstanding some 7%.

Revenue rose 4.4% to $104.19 billion, beating the $102.93-billion Wall Street estimate, according to a Thomson Reuters poll.

International sales jumped 12%, and were up 6.2% in constant currencies, as operating earnings increased 1.2%. U.S. sales edged up 0.6%. For the current quarter, Wal-Mart projected earnings from continuing operations of $1.05 to $1.10, bracketing the average Street estimate.

Wal-Mart shares were off 0.6% to $55.70 in premarket trading.

-By Karen Talley, Dow Jones Newswires; 212-416-2196; karen.talley@dowjones.com

-Matt Jarzemsky and Kevin Kingsbury contributed to this article