Wal-Mart Stores Inc., world’s largest retailer, announced a 6.9% increase in its first-quarter profits, way beyond Wall Street’s estimations. The company explained that higher sales, due to lower prices, and a good marketing strategy (good customer service, higher gross margin due to a well-managed inventory) were the secret to exceeding analysts’ expectations.

In the first quarter, ended April 30, the company’s net income rose to $3.02 billion, or 76 cents a share, from $2.83 billion, or 68 cents a share last year. And that fits perfectly with the retailer’s own forecasts for the first quarter. Thomson Financial analysts predicted earnings of 75 cents a share.

Wal-Mart’s total revenue went up 10 percents, from $86.41 billion one year ago, to $95.30 billion in the first quarter. At the same time, the net sales increased from $85.4 billion the year before to $94.1 billion this year. The gross margin rose from 23.5% to 23.6%. Without fuel, the domestic properties sales went up 2.9 percent.

Now that the first quarter has ended, analysts already started to predict the second-quarter earnings. And so did Wal-Mart: “There are still uncertainties about the rest of the year,” Wal-Mart Chief Executive Lee Scott said, MarketWatch reports. “The economy is playing a critical factor in 2008.”

Analysts’ predictions grant 78 cents to 81 cents a share for the fiscal second-quarter, while Wal-Mart expects anything from zero to a 2% increase in sales.

Wal-Mart shares dropped 1.4% in pre-market trading, to $57.65, after reaching $58.02 on Monday. Overall, the shares went up 22 percent in the past year.

“Our customers appreciate that Wal-Mart is the consistent price leader,” Scott said, as quoted by CNN. “We continue to make progress in delivering our mission of saving people money so they can live better.”