Lamb Weston leads losses among S&P 500 stocks in its largest one-day drop ever on earnings miss

By Steve Gelsi

Potato processor says new software system impacted its quarterly results

Lamb Weston Holdings Inc.'s stock fell nearly 20% on Thursday, for its largest one-day loss on record, after the potato-processing company blamed a slower-than-expected switch to a new software system for impacting its third-quarter results.

Lamb Weston's stock (LW) eclipsed the largest one-day drop in its history, when it fell by 17.9% on March 16, 2020. The stock sank 19.4% to $81.53, its lowest price since September 2022.

The stock also was the worst performer among S&P 500 SPX components.

"The ERP [enterprise resource planning system] transition temporarily reduced the visibility of finished goods inventories located at distribution centers, which affected our ability to fill customer orders," the company said. "In turn, this pressured sales volume and margin performance."

The company said it has now solved the ERP problem and it sales are picking up again.

Lamb Weston (LW) said its earnings for the three months ended Feb. 25 fell to $146.1 million, or $1.01 a share, from $175.1 million, or $1.21 a share, in the year-ago quarter.

Adjusted earnings of $1.20 a share fell short of the FactSet consensus estimate of $1.45 a share.

Sales rose by 16% to $1.46 billion, below analysts' estimate of $1.65 billion.

Lamb Weston also took a $25 million charge to write off the value of excess raw potatoes.

Looking ahead, Lamb Weston now expects 2024 adjusted income of $5.50 to $5.65 a share, below analysts' estimates of $6.03 a share. The company is projecting 2024 sales of $6.54 billion to $6.6 billion, below the $6.88 billion analysts' estimate.

"After implementing systems adjustments and modifying processes, we believe the impact is behind us as our order fulfillment rates have normalized," the company said.

Prior to Thursday's moves, Lamb Weston stock was down by 6.5% so far in 2024, compared to a 9.3% rise by the S&P 500 SPX.

-Steve Gelsi

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04-04-24 1619ET

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