Wal-Mart's (WMT) U.S. sales slump is one of the worst in its history. Nothing the company tries here seems to work.

The retail giant reported a solid first quarter Tuesday, beating analysts' expectations with a 3.8% gain in profit. But the store relied on strong overseas business to overcome a sales drop in the U.S. that has stretched for eight straight quarters.

Meanwhile, other retailers in the U.S., including dollar stores and Target (TGT), are eating away at Wal-Mart's market share here. Wal-Mart executives said American shoppers are running out of money faster than before.

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"Our core U.S. customers are stretched," Wal-Mart's chief executive, Mike Duke, said in a call discussing the first-quarter performance. "They are concerned about rising gas (and) food prices and employment issues."

Investors weren't all that pleased with Wal-Mart's earnings news. The stock dropped 1% in morning trading to $55.47.

Wal-Mart said it has noticed a change in shoppers' spending habits. People are foregoing clothes and home furnishings in favor of buying more groceries, detergent and other household goods.

You'd think the opposite would be occurring. Wal-Mart, which touts its everyday low prices, would seem like the natural place for shoppers to turn to in an economic downturn. And, as it turns out, the average amount of money a shopper spends there is up from a year ago.

The real problem is that Wal-Mart is losing shoppers, and store traffic is down. People don't want to buy the bundled four-pack of air fresheners, for example, even though they are a better deal per unit. Instead, they just want to buy a single can for even less money.

Shoppers have turned to dollar stores and grocery stores for many of those single-unit household items, including detergent and tissues.

So Wal-Mart is changing its strategy for these new-economy shoppers. It's going to open more of its grocery-only Neighborhood Markets, which are much smaller than the typical Wal-Mart. It will also open Walmart Express stores for groceries and some other items. It's also adding more of the items people are buying, like groceries and household goods, to its regular stores.

In the first-quarter, U.S. same-store sales slid 1.1%, which is about what the company expected. Analysts were expecting a 1.3% drop. Bad weather kept some shoppers away, and others simply bought groceries and skipped other items like clothing.

Wal-Mart's profit was $3.4 billion, or 98 cents a share, in the quarter. That was slightly better than a year ago, when the company reported $3.3 billion, or 87 cents a share, in profit. Analysts were looking for 95 cents a share.

Sales came in at $103.4 million, higher than the $102.9 billion analysts wanted to see. That gain was largely thanks to international sales, which jumped 11.5%.

For the current quarter, Wal-Mart said it expects profit at $1.05 to $1.10 a share, up from 97 cents in the year-ago period. Analysts are expecting $1.08.

And will it end its losing streak in the U.S.? Even Wal-Mart isn't sure, saying U.S. sales could be anywhere from down 1% to up 1%.

And if international operations are where the money is, Wal-Mart is jumping in even more. The company will open more stores in China faster than it had originally planned. "The best thing they have going for them is the international side of the business," a retail consultant told Bloomberg.