Walgreens Boots Alliance (NASDAQ: WBA) shares surged 24% on Friday, January 10, 2025, following the company's announcement of its first quarter fiscal 2025 financial results. The significant stock price increase can be attributed to several factors, including strong earnings performance, revenue growth, and strategic initiatives aimed at improving the company's future earnings and cash flow.



1. Strong First Quarter Earnings: Walgreens reported adjusted earnings per share (EPS) of $0.51 for the first quarter of fiscal 2025, beating analysts' revised expectations of $0.37. This 37.8% beat contributed to the stock's strong performance.
- Quote: "Adjusted earnings per share (EPS)2 was $0.51 versus adjusted earnings per share of $0.66 in the year-ago quarter driven by lower U.S. retail sales and prior year sale-leaseback gains, partly offset by cost savings and growth in U.S. Healthcare" (Source: Walgreens Boots Alliance, Inc. press release, Jan. 10, 2025)
2. Revenue Growth: Walgreens' revenue rose 7.5% year-over-year to $39.46 billion, surpassing the consensus estimate of $37.28 billion. This 6.3% beat contributed to the stock's positive performance.
- Quote: "First quarter sales increased 7.5 percent year-over-year to $39.5 billion, up 6.9 percent on a constant currency basis" (Source: Walgreens Boots Alliance, Inc. press release, Jan. 10, 2025)
3. Footprint Optimization Program: Walgreens announced a footprint optimization program targeting approximately 1,200 closures over the next three years, including approximately 500 closures in fiscal 2025. This program is expected to be immediately accretive to adjusted EPS and free cash flow.
- Quote: "Announcing footprint optimization program targeting approximately 1,200 closures3 over the next three years, including approximately 500 closures in fiscal 2025, which will be immediately accretive to adjusted EPS and free cash flow" (Source: Walgreens Boots Alliance, Inc. press release, Oct. 15, 2024)
4. Maintaining Full-Year Guidance: Despite the challenges faced in the U.S. Retail Pharmacy segment, Walgreens maintained its full-year FY25 adjusted EPS guidance of $1.40 to $1.80. This guidance, driven by expansion in U.S. Healthcare and international markets, reassured investors about the company's long-term prospects.
- Quote: "Maintaining fiscal 2025 adjusted EPS2 guidance of $1.40 to $1.80, with growth in U.S. Healthcare and International more than offset by a decline in U.S. Retail Pharmacy, a higher adjusted effective tax rate, and lower contributions from sale-leaseback and Cencora earnings" (Source: Walgreens Boots Alliance, Inc. press release, Jan. 10, 2025)



These factors, particularly the adjusted EPS and revenue beats, drove Walgreens' stock performance, as investors reacted positively to the company's ability to exceed expectations despite facing challenges in its U.S. Retail Pharmacy segment. The Footprint Optimization Program, in particular, is expected to have a significant positive impact on Walgreens' future earnings and cash flow by reducing costs, improving profitability, enhancing cash flow management, and better focusing on growth opportunities.

In conclusion, Walgreens' stock price surge on Friday, January 10, 2025, can be attributed to the company's strong first quarter earnings, revenue growth, and strategic initiatives aimed at improving future earnings and cash flow. Investors reacted positively to the company's ability to exceed expectations and its plans to optimize its store footprint, leading to a significant increase in the stock's value. As Walgreens continues to execute on its strategic priorities, investors may continue to see positive developments in the company's stock price.