Updated from 7:24 a.m. EDT to include comments from Walmart execs and stock price. 

Hammering home the message of cheap is serving Walmart (WMT - Get Report) well among spendthrift U.S. shoppers.

The world's largest retailer reported Thursday that second-quarter sales rose 0.5% to $120.8 billion, beating Wall Street forecasts of $120.2 billion. Earnings came in at $1.07 a share against the $1.02 a share estimate of analysts. Walmart guided to 95 cents a share to $1.08 a share three months ago. The company lifted its full-year profit forecast Thursday to $4.15 a share to $4.35 a share from its previous outlook of $4 to $4.30 a share. 

But the standout was the sales strength at Walmart U.S., especially a day after rival Target (TGT - Get Report) reported a surprising second-quarter sales decline. Walmart U.S. notched its eighth straight same-store sales increase with a gain of 1.6%. All three of Walmart's product categories -- grocery, health and wellness and general merchandise -- saw sales growth. 

Shares are up 2.4% to $74.65 Thursday.

For the most part, Walmart's U.S. sales were driven by more people visiting its supercenters as traffic rose for the seventh straight quarter. The traffic gains come as Walmart started slashing prices earlier this year in areas such as food and other household products as part of a multi-year, billion dollar plus investment in lower prices. Its new price-cutting campaign was originally unveiled at an investor meeting in October.

"I can tell you that when we initially lower prices, sales go down because they are deflated. But then people go home and tell their friends and family and we sell more units," Walmart U.S. CEO Greg Foran told TheStreet in a phone interview when asked about the early impact of the price investments.  

Walmart isn't just cutting prices to ring up sales among lower income Americans, however. The retailer is smack in the middle of a major private-label product push -- spanning frozen food to beer --  this year across all of its store concepts. Private-label products, otherwise known as store brands, are simply products on which stores put their own names or brands.

Consumers often love private labels because they tend to be cheaper in price relative to well-known national brands. Retailers love them because they often carry higher profit margins than national brands, which cost more for retailers to buy due to big-name companies such as Pepsi (PEP - Get Report)  and General Mills (GIS - Get Report)  passing along their product development and marketing expenditures.

Clearly, Walmart's emphasis on value -- either through offering a new private-label product or a lower price than before -- during general consumer uncertainty in the U.S. is something that competitor Target could have used.

Target's second-quarter same-store sales fell 1.1%, a sharp reversal from a 2.4% increase a year ago, thanks to a decline in customer traffic. It marked the first time Target delivered a same-store sales decline since a 0.3% drop in the first quarter of 2015, according to Bloomberg data.  

Target conceded that its food business was a "disappointment" while Walmart highlighted "strong traffic" to its grocery department.   

Target CEO Brian Cornell suggested on a call with analysts Wednesday that the retailer has to emphasize the "pay less" portion of its long-time "expect more, pay less" marketing message in order to win consumers in the currently ultra-competitive environment.

"We've got to make sure that we are bringing the best of our signature categories and bringing the value the guest is looking for in core household essentials to win trips, and win back trips in the second half of the year," Cornell said, adding the company would "rebalance" its marketing messages and promotions this year.

For right now, it appears consumers will likely keep telling their friends more about the 50 cents they saved on a package of chicken at Walmart than the sexy dress they just saw while walking around a Target.