Lamb Weston shares plunge on earnings miss, lowered outlook

Lamb Weston Holdings, Inc. (NYSE: NYSE:LW ) saw its shares tumble 13.3% after the company reported second-quarter earnings that fell well short of expectations and slashed its full-year guidance.

The company posted adjusted earnings per share of $0.66 for the quarter ended November 24, missing the analyst consensus of $1.05 by 39 cents. Revenue declined 8% YoY to $1.6 billion, below estimates of $1.67 billion.

Lamb Weston cited higher-than-expected manufacturing costs and softer volumes for the disappointing results. The company also noted challenging conditions persisting through fiscal 2025 and into 2026, driven by accelerating capacity additions and softening global frozen potato demand.

"Our financial results in the second quarter were below our expectations," said CEO Tom Werner. "Higher-than-expected manufacturing costs and softer volumes accounted for the shortfall, while price/mix and operating expenses were broadly in line with our targets for the quarter."

For fiscal 2025, Lamb Weston now expects adjusted EPS of $3.05-$3.20, down sharply from its previous outlook of $4.15-$4.35 and well below the $4.20 consensus. The company also lowered its revenue forecast to $6.35-$6.45 billion from $6.6-$6.8 billion previously.

The company is taking steps to adapt, including a restructuring plan announced in October aimed at driving operational efficiencies. Lamb Weston expects the plan to generate about $55 million in pre-tax cost savings in fiscal 2025.

"We are executing with urgency and discipline to make lasting improvements to our operations as we weather what we believe are transitory challenges," Werner added.

The board approved a $250 million increase to Lamb Weston's share repurchase authorization and raised the quarterly dividend by 1 cent to $0.37 per share.

Meanwhile, the company has also announced the appointment of Michael Smith, current Chief Operating Officer of Lamb Weston, as its new President and Chief Executive Officer, effective January 3, 2025.

Smith succeeds Werner, who is stepping down as CEO. He will serve in an advisory role through August 31, 2025, to help the company ensure a smooth transition.

Source: Investing.com