(Reuters) - Home Depot Inc (HD.N) reported higher-than-expected quarterly earnings on tighter cost controls, prompting the world's largest home improvement chain to raise its profit outlook for the year.

However, the company softened its full-year sales forecast as U.S. consumers continue to put off expensive renovations and open their wallets only for repairs and small remodeling projects.

Home Depot, which has benefited from a slower expansion strategy, supply chain improvements and cost cuts that included job reductions in January, said it would continue to invest in its efforts to improve its merchandise and distribution.

The sentiment echoed that of smaller rival Lowe's Cos (LOW.N), which said on Monday it would rather focus on boosting margins and market share in the coming year than bet on a U.S. economy plagued by high unemployment.

Home Depot's net income rose to $834 million, or 51 cents a share, in the third quarter ended October 31, from $689 million, or 41 cents a share, a year earlier.

Analysts on average were expecting 48 cents a share, according to Thomson Reuters I/B/E/S.

Sales rose 1.4 percent to $16.60 billion, slightly above the analysts' average estimate of $16.59 billion. Sales at U.S. stores open at least a year rose 1.5 percent.

Home Depot forecast earnings of $1.94 a share from continuing operations for the current fiscal year, up 4 cents from its prior outlook. The company expects sales growth of about 2.2 percent, down from a prior view of 2.6 percent.

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