EAGLE, Idaho - Lamb Weston Holdings, Inc. (NYSE: NYSE:LW) reported a significant miss in its fourth-quarter earnings and provided a weaker-than-expected outlook for fiscal 2025, prompting a sharp 16% decline in its stock price.
The company, a leading supplier of frozen potato products, announced adjusted earnings per share (EPS) of $0.78 for the quarter, falling short of analysts' expectations of $1.26. Revenue also came in below consensus, at $1.61 billion compared to the anticipated $1.7 billion.
The disappointing results were compounded by the company's forward-looking guidance, which forecasts fiscal 2025 EPS in the range of $4.35 to $4.85, significantly below the analyst consensus of $6.09. Revenue projections for the same period are set at $6.6 to $6.8 billion, again falling short of the expected $6.808 billion.
Tom Werner, President and CEO of Lamb Weston, expressed disappointment in the company's fourth-quarter performance, attributing the shortfall to lower-than-expected price/mix results, market share losses, and a slowdown in restaurant traffic in the U.S. and key international markets. Additionally, the company faced losses related to a voluntary product withdrawal.
Werner also noted that the operating environment has rapidly changed over the past year, with global restaurant traffic and frozen potato demand softening. This has led to increased capacity in North America and Europe, creating a supply-demand imbalance that the company expects to persist throughout much of fiscal 2025. In response, Lamb Weston is making operating adjustments, including reinvigorating volume growth, targeted investments in price and trade support, and cost and supply chain productivity initiatives.
Despite the near-term challenges, Werner remains focused on executing long-term strategies and improving customer service, believing that the actions being taken will strengthen the company's portfolio and position it to continue creating value for stakeholders over the long term.
Lamb Weston's full-year fiscal 2024 results showed a mixed picture, with GAAP net sales increasing 21% to $6.468 billion, including $1.107 billion of incremental sales attributable to acquisitions. However, net income for the year declined 28% to $726 million, and diluted EPS also fell by 28% to $4.98. On an adjusted basis, net income and EPS for the full year increased by 6% to $740 million and $5.08, respectively.
The company's effective tax rate for the fourth quarter was 28.2%, compared to 12.6% in the prior year quarter. Excluding certain items impacting comparability, the effective tax rate for the quarter was 28.4%, versus 17.6% in the prior year quarter.
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