Wal-Mart Stores Inc., the world’s largest retailer, said December sales at U.S. stores open at least a year rose about 1.6%, ending the holiday shopping season with its biggest increase since August.

Wal-Mart exceeded its forecast for growth of 1% or less during the five weeks starting Nov. 25. The Bentonville, Arkansas-based retailer provided the December preliminary figure in a recorded call yesterday.

Sales growth has slowed in recent months, hurt by store renovations and a push to add fashionable clothing at the expense of lower-cost items. Wal-Mart entered the holiday season by reducing prices on toys, electronics and groceries in an effort to draw customers who increasingly were shopping elsewhere.

“I think eventually they’ll get right,” said Rick Rubin, an analyst with Mercantile Capital Advisors in Baltimore. “They are facing quite a bit of internal challenge and have some macro issues with low-income consumers.”

Wal-Mart lowered prices on about 10,000 items this holiday season, about the same as last year, Bernard Sosnick, an analyst at Oppenheimer & Co., wrote in a Dec. 19 report.

Shares of Wal-Mart rose 16 cents to $46.17 December 29 in New York Stock Exchange composite trading. They fell 1.3% in 2006, compared with Target Corp.’s 3.8% gain.

Target said December 18 that December same-store sales will climb within its forecast range of 3.5% to 5.5%.

Minneapolis-based Target, the second-largest U.S. discount chain, outpaced Wal-Mart in comparable-store sales in 12 of the last 15 quarters. It lured shoppers with orderly stores and designer clothing and home goods, such as the Mod Baby bedding collections by Amy Coe.

Wal-Mart has emulated that strategy, upgrading electronics and clothing. The company plans to clear clutter and renovate dressing rooms at 1,800 U.S. stores by the middle of next year. The retailer had more than 3,900 locations, including almost 3,300 U.S. discount stores and supercenters, as of November 30.

The effort to bring in upscale merchandise is “very mixed so far,” an analyst at Rochdale Investment Management in New York, David Abella, said. “It remains to be seen if it will be successful.” He manages $2.2 billion in assets, including Wal-Mart shares.

Chief Executive Officer H. Lee Scott said as much in October, when he told analysts that while adding higher-priced electronics worked well, Wal-Mart overdid the move toward more fashionable clothing. The company is pulling the Metro 7 women’s clothing line, introduced in October 2005, from almost half of the 1,500 U.S. stores that carried it.

“Wal-Mart has got to fix their apparel problem,” said Britt Beemer, chairman of Charleston, South Carolina-based America’s Research Group, on December 26. “Apparel is still their weakness. It’s the category that makes you the most amount of money.”

October’s comparable-store sales growth was 0.5%, while November declined 0.1%, the worst performance in more than 10 years.