Lamb Weston Reports Slight Increase in Net Sales but Decline in Profitability for Q1 Fiscal 2026

Lamb Weston Holdings, Inc. reported a slight increase in net sales for the first quarter of fiscal 2026, reaching $1,659.3 million, up from $1,654.1 million in the same period last year. However, when adjusted for constant currency, net sales declined by 1%. The company experienced a 6% increase in volume, driven by customer retention and new contracts, particularly in North America and Asia. Despite this volume growth, a 7% decline in price/mix negatively impacted overall sales figures. The North America segment saw a 2% decrease in sales to $1,084.6 million, while the International segment increased by 4% to $574.7 million, aided by favorable foreign currency translation.

Profitability metrics showed a decline, with gross profit falling to $342.4 million from $356.0 million year-over-year. This decline was attributed to unfavorable price/mix dynamics, although it was partially offset by lower manufacturing costs per pound due to ongoing cost-saving initiatives. Selling, general, and administrative expenses rose to $153.6 million, up from $143.9 million, but adjusted SG&A decreased to $132.4 million, reflecting the benefits of cost-saving measures. Net income for the quarter was $64.3 million, a significant drop from $127.4 million in the prior year, resulting in earnings per share of $0.46 compared to $0.89.

The company has been actively implementing its Cost Savings Program and a Restructuring Plan, which have incurred $31.9 million in pre-tax charges during the quarter. These initiatives are expected to yield long-term benefits, although they have contributed to the current financial pressures. Lamb Weston also reported a decline in equity method investment earnings, posting a loss of $0.6 million compared to earnings of $11.3 million in the previous year, primarily due to lower sales and an unfavorable product mix.

Operationally, Lamb Weston has focused on enhancing its manufacturing capabilities, including the startup of a new production facility in Argentina, which is anticipated to support future growth. The company reported a cash increase to $98.6 million and a net cash flow from operating activities of $352.0 million, reflecting improved working capital management. Looking ahead, Lamb Weston expects continued macroeconomic pressures and a competitive environment, particularly in international markets, but anticipates that customer demand for its products, especially french fries, will remain stable. The company projects earnings to decline further due to rising input costs and increased depreciation from capacity expansions, although these will be partially offset by the benefits from its restructuring efforts.