Shares of Lamb Weston Holdings, Inc. (NYSE: LW) stayed inexperienced on Thursday. The inventory has dropped 18% over the previous three months. The corporate noticed a decline in its income and earnings for the primary quarter of 2025 because it confronted smooth demand for its merchandise and a slowdown in restaurant visitors. Because it navigates a difficult setting, the French fry maker has introduced a restructuring plan and revised its earnings steerage for the complete 12 months.
Gross sales and income decline
Lamb Weston’s web gross sales dropped 1% year-over-year to $1.65 billion within the first quarter of 2025. GAAP EPS fell 45% to $0.88 whereas adjusted EPS decreased 55% to $0.73 in comparison with final 12 months.
Softness in visitors and demand
In the course of the first quarter, Lamb Weston noticed softness in restaurant visitors and frozen potato demand and it expects this pattern to proceed for the remainder of fiscal 12 months 2025. The corporate’s quantity declined 3% in Q1, primarily as a consequence of buyer share losses, smooth restaurant visitors, the impression from exiting lower-priced and lower-margin enterprise in Europe and the impression of a voluntary product withdrawal.
On its quarterly convention name, LW stated US restaurant visitors, together with QSR visitors, was down 2% in Q1, which was a sequential enchancment from a 3% decline seen in This fall 2024. Outdoors the US, restaurant visitors traits in key worldwide markets have been softer in comparison with This fall 2024. Restaurant visitors within the UK and Germany have been each down sequentially, whereas in France and Italy restaurant visitors continued to rise however at a slower fee in comparison with This fall.
Primarily based on its expectations over visitors and demand traits, Lamb Weston believes the supply-demand imbalance that has been pushed by the visitors decline will persist by means of essentially the most a part of fiscal 12 months 2025.
Steering lower
Lamb Weston lowered its earnings steerage for the complete 12 months of 2025. It expects GAAP EPS of $2.70-3.15 for FY2025. Adjusted EPS for the 12 months is now anticipated to be $4.15-4.35 versus the earlier outlook of $4.35-4.85.
LW reaffirmed its gross sales outlook for the 12 months. It expects web gross sales to develop round 2-5% on a relentless foreign money foundation to $6.6-6.8 billion.
Restructuring plan
Lamb Weston is executing a restructuring plan as a way to decrease provide chain prices, cut back working bills, and enhance money flows. As a part of these efforts, the corporate has closed down one in all its older, higher-cost amenities positioned in Connell, Washington completely. As talked about on its earnings name, the closure of this facility reduces LW’s complete capability in North America by over 5%.
Lamb Weston can also be quickly paring down manufacturing traces and schedules throughout its manufacturing community in North America because it makes use of extra environment friendly, lower-cost manufacturing traces and works on decreasing its completed items stock ranges.
As a part of the restructuring plan, Lamb Weston plans to chop its world workforce by round 4% and get rid of some job positions that haven’t been stuffed. It’s also decreasing its FY2025 capital expenditures to $750 million from the sooner deliberate quantity of $850 million. The restructuring plan is estimated to generate approx. $55 million in pre-tax price financial savings and a discount in working capital in FY2025.
