Key Takeaways
- Lamb Weston stock rose on news that it will close a facility, reduce production, and lay off workers in a restructuring expected to save $55 million in fiscal 2025.
- The company said the moves will improve operating efficiency, profitability, and cash flows.
- Lamb Weston also reported better-than-expected quarterly results on increased volumes, higher prices, and lower expenses, while cutting its full-year profit guidance.
Shares of Lamb Weston Holdings (LW), one of the world’s largest makers of frozen potato products, announced a restructuring that includes production cuts and layoffs.
The company said it would be closing its Connell, Wash. plant, temporarily curtailing production lines and schedules in North America; slashing its workforce by about 4%; and eliminating unfilled positions. Lamb Weston said the moves are expected to create $55 million in cost savings and reduce capital expenditures by $100 million in fiscal 2025. It anticipates taking a $200 million to $250 million charge to pay for them.
The news lifted Lamb Weston’s stock. The shares, up more than 3%, were recently among the S&P 500’s top gainers.
CEO Tom Werner said the changes “are proactive steps designed to improve our operating efficiency, profitability and cash flows, while also positioning us to continue to make strategic investments to support our customers and create value for our stakeholders over the long-term.”
The news came as Lamb Weston posted first quarter fiscal 2025 adjusted diluted earnings per share (EPS) of $0.73, a penny more than expected by analysts surveyed by Visible Alpha. Revenue, which fell 1% to $1.65 billion, also beat forecasts.
The company reduced its guidance for full-year adjusted net income and adjusted diluted EPS. It also lowered its outlook for adjusted selling, general, and administrative expenses (SG&A) to account for the savings in labor costs from the job reductions. Restaurant traffic has remained “soft,” the company said.
Shares of Lamb Weston are down more than 35% this year.
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