Home Depot Inc raised its fiscal-year outlook for the third time in six months as a host of efforts to improve distribution and boost customer service helped the No. 1 home improvement chain gain share from archrival Lowe's Cos Inc .

Home Depot, which reported stronger-than-expected quarterly results on Tuesday, also raised its quarterly dividend by 16 percent to 29 cents per share.

The news came a day after Lowe's also beat quarterly profit estimates and laid out a blueprint to win back shoppers from its larger competitor.

Home Depot has benefited from more centralized distribution centers, better merchandising tools, efforts to shift more employees to jobs where they serve customers directly and the use of more technology in stores.

The company has also been quicker to cut costs than Lowe's, and in some cases has benefited as housing markets have improved in regions where it has a heavy presence.

Home Depot has also gained from its slower expansion strategy. Under Chief Executive Frank Blake, Home Depot has been closing concept stores and upgrading service and products in its core retail business to win market share from Lowe's.

Blake, who became chairman and CEO in early 2007 after Robert Nardelli resigned, returned the company's focus to being the regular big-box strip-mall type store and improving its merchandise, supply chain and customer service.

Overall, they are just out-executing Lowe's at this point, RBC Capital Markets Scot Ciccarelli said. Lowe's is trying to copy a lot of these same efforts that I think have helped Home Depot, but it is going to take a while for them to benefit from some of the changes that they are currently making.

Home Depot's sales at stores open at least a year rose 4.2 percent globally, including a 3.8 percent rise in the United States. This was the 10th consecutive quarter that the company has outshone Lowe's, whose same-store sales rose 0.7 percent in the quarter. Both chains got a lift from sales related to Hurricane Irene.

The home improvement industry grew 2 percent in the 12 months ending September 2011, a report from market research firm NPD showed. However, the industry -- pressured by the weak economy and housing market -- is still down 7 percent compared with the same time period in 2009.

We still don't see and we don't expect to see in the near term any meaningful tailwind from the housing market, Home Depot's CEO said on Tuesday, echoing comments from Lowe's CEO Robert Niblock earlier this week.

Net income rose to $934 million, or 60 cents a share in the third quarter ended on October 30, from $834 million, or 51 cents a share, a year earlier.

Analysts on average were expecting a profit of 58 cents a share, according to Thomson Reuters I/B/E/S.

Sales rose 4.4 percent to $17.33 billion, beating the analysts' average estimate of $17.12 billion.

For the current fiscal year, Home Depot sees earnings of $2.38 a share, up from its prior outlook of $2.34. It continues to expect sales to rise 2.5 percent in the period.

The strong results from Home Depot coincided with a report from the Commerce Department that showed U.S. retail sales rose broadly in October, suggesting the economy started the fourth quarter with some strength.

Home Depot shares, which had risen as much as 1.3 percent earlier on Tuesday, were down 8 cents at $38.17 on the New York Stock Exchange.

(Reporting by Dhanya Skariachan; Editing by Lisa Von Ahn, Dave Zimmerman)

Home improvement