Lamb Weston slumps 27% after fiscal-Q4 earnings

Lamb Weston (LW.US) is the worst performing S&P 500 member today, slumping around 27% at press time. The plunge was triggered by release of a dismal fiscal-Q4 2024 earnings report. 

US French fries supplier reported fiscal-Q1 net sales that missed expectations, reporting worse than expected sales in both North America and International markets. Adjusted EBITDA and adjusted EPS missed analysts' estimates significantly. A positive price/mix, although weaker than expected, was not enough to offset declines in sales volumes.

To make things worse, the company issued a lackluster guidance for fiscal-2025 as well, saying that it expects it to be another challenging year for the company as slowdown in restaurant traffic in North America and key international markets turned out to be bigger than expected. 

Company said that it is making operating adjustments in order to reinvigorate volume growth as well as re-phasing of investments to modernize production capabilities in order to better match current demand environment.

Disastrous earnings report from Lamb Weston is also having an impact on other stocks. McDonald's (MCD.US), for whom Lamb Weston is key supplier of French fries, launched today's trading almost 3% lower, but has since recovered majority of the drop.

Fiscal-Q4 2024 earnings

• Net sales: $1.61 billion vs $1.70 billion expected
  • North America: $1.11 billion vs $1.17 billion expected
  • International: $498.7 million vs $531 million expected
• Adjusted EBITDA: $283.4 million vs $357.4 million expected
  • North America: $276.5 million
• North America sales volume: -7%
• International sales volume: -9%
• Price/mix: +3.0% vs +5.4% expected
  • North America: +3%
  • International: +2%
• Adjusted EPS: $0.78 vs $1.25 expected

Full-year fiscal-2025 forecast

• Net sales: $6.6-6.8 billion vs $6.79 billion
• Adjusted EBITDA: $1.38-1.48 billion vs $1.63 billion expected
• Capital expenditures: 'about $850 million' vs $879 million expected

Lamb Weston (LW.US) slumps to the lowest level since March 2022, following a disappointing fiscal-Q4 2024 earnings report. Source: xStation5