Rite Aid Corp. (RAD) Thursday said quarterly profit fell by nearly half on weak pharmacy sales and rising expenses, and the No. 3 U.S. drugstore chain cut its full-year earnings outlook, sending its stock down as much as 6 percent.

Rite Aid, grappling with stiff competition from rivals like Walgreen Co. (WAG) and CVS Corp. (CVS), said profit slid to $33.4 million, or 5 cents a share, in the first quarter ended May 28, from $63.7 million, or 10 cents a share, a year earlier.

But the results topped Wall Street estimates. Analysts' average profit forecast was 2 cents a share, according to Reuters Estimates.

"Pharmacy sales were disappointing and put pressure on selling, general and administrative expenses this quarter," Mary Sammons, Rite Aid president and chief executive officer, said in a statement. "We remain committed to increasing pharmacy sales, improving customer satisfaction and containing costs."

Besides poor sales, Rite Aid also attributed the profit drop to a $15.5 million store closing and impairment charge, and an $8.9 million rise in income tax expense.

Based on current trends, it said it expects net income for the full year of $31 million to $62 million, or nil to 5 cents per share. Previously, it had forecast $45 million and $71 million, or 2 cents to 7 cents per share.

Analysts' average forecast is 5 cents a share, according to Reuters Estimates. The company earned 15 cents a share in the prior year.

Shares outstanding declined to 529,684 in the first quarter from 574,091 a year earlier.

Rite Aid shares were down 25 cents at $4.30 on the New York Stock Exchange (search) after falling as low as $4.25 earlier in the session.