updated 10/11/2007 6:19:24 PM ET 2007-10-11T22:19:24

Wal-Mart Stores Inc., the world’s largest retailer, raised it earnings outlook for the third quarter on Thursday, citing better cost controls at the division that runs its namesake U.S. stores.

Chief Executive Lee Scott said the quarter was seeing an improvement from what he called a “very poor performance” in the second quarter. Wal-Mart cut its profit outlook for the year when it reported second quarter earnings in August, saying that consumer spending has slowed in the U.S. and abroad.

The higher projection for the third quarter sent Wal-Mart shares up $1.31, or 2.87 percent, to close at $46.90 Thursday.

Wal-Mart boosted its forecast for earnings from continuing operations in the third quarter to a range of 66 cents to 69 cents per share, up from an earlier outlook for of 62 cents to 65 cents per share.

“For the first two months of the quarter, we have seen improvement in initial margin and expense leverage at the Wal-Mart Stores division, which is driving this change,” said Tom Schoewe, chief financial officer.

The latest profit projection came as the company said sales at its U.S. stores open at least a year rose 1.4 percent in September, driven by growth at its Sam’s Club warehouse stores. A year ago, the company saw a September increase in same-store sales of 1.6 percent.

Analysts surveyed by Thomson Financial expected same-store sales growth of 1.8 percent. Same-store sales, or sales at stores open at least a year, is a key indicator of retailer performance since it measures growth at existing stores rather than newly opened ones.

Scott, speaking at a retail conference in Rogers after the release, said the current quarter is benefiting from its Sam’s Club membership stores and its international division as well as U.S. Wal-Mart stores.

“We saw an improvement and an indication of being back on track this quarter,” Scott said a meeting hosted by the Center for Retailing Excellence of the University of Arkansas’s Sam M. Walton Business College.

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