Lamb Weston Holdings Inc (LW)

Lamb Weston Holdings (LW) stock dropped by 19.37% due to the company's disappointing fiscal third-quarter results ended Feb. 25, 2024 and weak outlook. Here are the key details:

• Fiscal Q3 results: While net sales grew by 16% year over year to $1.458 billion, including $357 million from its LW EMEA joint venture acquisition in Europe, adjusted net income decreased by 18% to $175 million, or $1.20 per share. Analysts had expected adjusted earnings of $1.45 per share on revenue closer to $1.65 billion.
• ERP System Transition Impact: CEO Tom Werner attributed the underperformance to the transition to a new enterprise resource planning (ERP) system, which temporarily reduced the visibility of finished goods inventories at distribution centers, affecting the company's ability to fulfill customer orders.
• Management's Response and Outlook: Management has implemented systems adjustments and modified processes to normalize fulfillment rates going forward. However, Lamb Weston also faced challenges from soft near-term restaurant traffic trends. As a result, the company reduced its full-year outlook for net sales to $6.6 billion (from $6.8 billion to $7 billion previously) and adjusted earnings per share to $5.50 to $5.65 (from $5.70 to $6.15 previously).
• **Investor Perspective: hile the underperformance was a temporary issue rather than a broader market condition, investors reacted strongly to the news, leading to a significant stock decline. The company's actions to address the ERP transition issues and adapt to changing market trends will be closely watched by investors moving forward.