BANGALORE (Reuters) - Close-out retailer Big Lots Inc <BIG.N> posted a higher-than-expected quarterly profit on tight expense controls on Tuesday and forecast a full-year profit that might exceed Wall Street estimates.

Net income for the second quarter ended August 1 rose to $28.4 million, or 34 cents per share, from $26 million, or 32 cents per share, a year earlier.

Excluding items, earnings were 35 cents a share, compared with the analysts' average forecast of 30 cents, according to Reuters Estimates.

Net sales fell 1.7 percent to $1.09 billion, while sales at stores open at least two years fell 2.4 percent.

Big Lots specializes in sales of excess inventory, ranging from televisions to bath towels to vacuums.

While demand for some of its discretionary items like home decor and furniture has suffered, Big Lots has been somewhat insulated from the recession as shoppers seek out its low prices on food, paper towels or pet food.

The retailer's results were also helped by improved efficiencies in distribution and transportation, lower advertising expenses and smaller payroll costs.

For the full year, the company sees income from continuing operations of about $1.92 a share to $2.02 a share. Analysts, on average, have expected earnings of $1.93 a share for the period.

(Reporting by Dhanya Skariachan; Editing by Lisa Von Ahn and Gerald E. McCormick)