UPDATE: Walgreen Shares Rise On Upbeat Q1 Earnings

Shares of Walgreen Co (NYSE: WAG) surged 2.8% in pre-market trading after the company reported stronger-than-expected fiscal first-quarter earnings.

The Deerfield, Illinois-based company posted quarterly net earnings of $809 million, or $0.85 per share, versus $695 million, or $0.72 per share, in the year-ago period. Excluding non-recurring items, the company's adjusted earnings came in at $0.81 per share.

Its revenue climbed 6.7% to $19.55 billion, while total same-store sales rose 5.7%. However, analysts were expecting earnings of $0.75 per share on revenue of $19.49 billion.

Customer traffic in comparable stores fell 2.7%, while basket size increased 4.2%. Front-end comparable store sales surged 1.5% in the quarter.

Pharmacy sales rose 9.0%, while pharmacy sales in comparable stores jumped 8.1%. Prescriptions filled in comparable stores rose 4.1% in the quarter.

In the quarter, the company generated free cash flow of $696 million and operating cash flow of $1.0 billion.

“This quarter we had solid performance across both our pharmacy and retail products businesses,” Walgreens President and CEO Greg Wasson said. “We truly appreciate that our 8,200-plus store teams exceeded the overall retail market in year-over-year sales growth heading into the holiday season, as we grew gross profit dollars faster than our costs during the quarter.”

Walgreen shares climbed 2.83% to $76.37 in pre-market trading.