Lamb Weston Reports 8% Decline in Net Sales and $36.1 Million Net Loss in Q2 Fiscal 2025

Lamb Weston Holdings, Inc. reported a significant decline in financial performance for the second quarter of fiscal 2025, with net sales of $1,600.9 million, down 8% from $1,732.1 million in the same period last year. The company's gross profit also fell sharply to $277.8 million, a decrease of 58% compared to $475.6 million in the prior year. This decline was attributed to higher manufacturing costs, lower sales volumes, and the impact of a restructuring plan that included $159.1 million in pre-tax charges. The net loss for the quarter was $36.1 million, translating to a loss of $0.25 per share, compared to a net income of $215.0 million, or $1.48 per share, in the previous year.

In the first half of fiscal 2025, Lamb Weston’s net sales totaled $3,255.0 million, down 4% from $3,397.4 million in the same period last year. The North America segment saw a 6% decline in sales, while the International segment experienced a 1% decrease. The company noted that volume declines were largely due to soft global restaurant traffic trends and customer share losses, compounded by strategic decisions to exit lower-margin business segments in Europe. The restructuring plan, announced on October 1, 2024, aims to enhance operational efficiency and is expected to generate approximately $55 million in pre-tax cost savings.

Operationally, Lamb Weston has been facing challenges, with a 6% decline in volume and a 2% decrease in price/mix for the second quarter. The company reported a significant increase in selling, general, and administrative expenses, which rose to $184.7 million from $170.0 million year-over-year. The restructuring plan has led to the permanent closure of a manufacturing facility and temporary curtailments in production across its North American network, resulting in a reduction in employee headcount and other operating expenses.

Looking ahead, Lamb Weston anticipates continued challenges in the second half of fiscal 2025, with expectations of declining earnings compared to the prior year. The company is preparing for rising input costs and increased SG&A expenses, primarily due to the restructuring plan and inflationary pressures. Despite these challenges, Lamb Weston is focused on implementing cost-saving initiatives and improving operational efficiency to support long-term growth and profitability. The company maintains a strong liquidity position, with $79.0 million in cash and $1.2 billion available under its revolving credit facility, which it believes will be sufficient to meet its business requirements for the next 12 months.