Shares of Lamb Weston Holdings, Inc. (NYSE: LW) had been down over 1% on Friday. The inventory has gained 13% over the previous three months. The frozen potato merchandise maker is scheduled to report its second quarter 2025 earnings outcomes on Thursday, December 19, earlier than market open. Right here’s a have a look at what to anticipate from the Q2 report:
Income
Analysts are projecting income of $1.67 billion for Lamb Weston in Q2 2025, which represents a decline of greater than 3% from the identical quarter a 12 months in the past. Within the first quarter of 2025, web gross sales declined 1% year-over-year to $1.65 billion.
Earnings
The consensus estimate for earnings per share in Q2 2025 is $1.03, representing a decline of practically 30% from the prior-year interval. In Q1 2025, adjusted EPS decreased 55% YoY to $0.73.
Factors to notice
Lamb Weston has been dealing with challenges when it comes to softness in restaurant site visitors and weak demand for frozen potato merchandise. It anticipates these headwinds to proceed by way of fiscal 12 months 2025, which isn’t a very good signal for the second quarter.
Final quarter, LW noticed a slight enchancment in restaurant site visitors traits within the US as quick-service eating places (QSRs) provided extra promotions. Though general US restaurant site visitors declined on a year-over-year foundation, it witnessed a pickup on a sequential foundation. Nonetheless, whilst site visitors traits appear to be bettering, prospects seem like buying and selling down in serving dimension i.e. choosing small fries as an alternative of medium fries. That is anticipated to negatively impression volumes.
In Q1, the corporate noticed volumes decline 3% because of gradual restaurant site visitors, buyer share losses, impacts from the exit of sure lower-price and lower-margin enterprise in Europe, and the impression of a voluntary product withdrawal. The amount decline was partly offset by development in key worldwide markets.
Gross sales within the North America phase decreased 3% YoY in Q1 whereas volumes fell 4% because of buyer share losses and a drop in restaurant site visitors within the US. Gross sales within the Worldwide phase rose 4% in Q1 whereas volumes dropped 1%, primarily because of impacts from the exit of lower-price and lower-margin enterprise in Europe. These enterprise exits are anticipated to proceed to be a headwind in Q2 2025.
Lamb Weston has been coping with larger prices which might be weighing on earnings. In Q1, adjusted gross revenue declined by $137.2 million to $353.1 million, primarily because of larger manufacturing prices per pound, decrease gross sales volumes, larger warehouse prices, and impacts from the voluntary product withdrawal. The upper manufacturing prices per pound largely mirrored enter price inflation.
With the intention to drive operational and price efficiencies, the corporate introduced a restructuring plan final quarter. The plan consists of the closure of its Connell manufacturing facility, the non permanent curtailment of sure manufacturing strains and schedules throughout its manufacturing community, job cuts and a discount in capital expenditures. Updates on this entrance may be anticipated within the Q2 report.
