The main reason for the lagging results was consumer hesitancydue to rising gas and energy costs, executives say. "Customers tellus they are most concerned about gas prices," said Lee Scott,president and chief executive officer, during a conferencecall.

The hope is for Wal-Mart executives that a massive storerenovation program will liven up sales. During the past three yearsthe retailer has averaged 300 remodels annually, but the companywill now try to undertake about 1,800 during the next 18 months.Areas of stores that will get particular attention are apparel,electronics and home departments.

Net sales for the company reached $84.5 billion for the quarter,which ended July 31, an 11.3% increase from the same year-agoperiod. International sales got the biggest lift, rising 31.9% onsales of about $18.7 billion. Sales abroad were boosted byacquisitions in Brazil, Central American and Japan. Meanwhile, theretailer is taking a net loss of $863 million on the sale of itsGerman and South Korean businesses.