Key Takeaways
- Lamb Weston blamed a software issue with negatively impacting third-quarter sales and led to the company to warn about full-year results, and shares plunged 20% in intraday trading Thursday.
- The potato processor said a slower-than-expected transition to a new enterprise resource planning (ERP) system affected its ability to fill customer orders.
- Lamb Weston believes the issue has been resolved, but fiscal 2024 profit and sales will be lower than originally estimated.
Shares of Lamb Weston Holdings (LW) plunged 20% in intraday trading Thursday as the potato processor posted lower-than-expected quarterly profit and sales, and warned about full-year results because of problems with a new software system.
Lamb Weston reported third-quarter adjusted earnings per share (EPS) of $1.20, with revenue up 16% to $1.46 billion. Both were short of forecasts.
Chief Executive Officer (CEO) Tom Werner blamed the shortfall on a slower-than-anticipated transition to a new enterprise resource planning (ERP) system in North America, which he said “negatively impacted our financial results in the quarter by more than we expected.”
Werner explained that the ERP delay “temporarily reduced the visibility of finished goods inventories located at distribution centers, which affected our ability to fill customer orders. In turn, this pressured sales volume and margin performance.” He added that the company believes the issue has been mitigated and order fulfillment rates have normalized.
Despite that, Lamb Weston said the residual effects led the company to revise its outlook. It now sees full-year adjusted EPS in a range of $5.50 to $5.65, down from the previous estimate of $5.70 to $6.15. It predicts revenue of $6.54 billion to $6.60 billion, lowered from the earlier estimate of $6.80 billion to $7.00 billion.
The news sent Lamb Weston shares tumbling 20% as of noon ET to $81.26. They earlier fell to $80.02, their lowest level since 2022.
Correction—April 4, 2024: This article was corrected to reflect the last time Lamb Weston’s shares fell to $80.02.