Why Lamb Weston Holdings’ stock was a winner on Wednesday

Very specialized food supply company Lamb Weston (LW 2.57%) was palatable for some investors on Wednesday after the release of its latest set of quarterly results. He beat both the top and bottom lines, if not necessarily by a wide margin, and was rewarded for that performance. Investors also liked the company’s news of a new restructuring program. Market players bid Lamb Weston’s share price up almost 3%, a figure that looked good compared to the smooth trajectory of S&P 500 index of the day.

Solid beat on the top line, narrow beat on profitability

For its fiscal first quarter of 2025, Lamb Weston’s net sales fell 1 percent year-over-year to a shade over $1.65 billion. The decline in both generally accepted accounting principles (GAAP) and non-GAAP (adjusted) net income was much more pronounced; the latter fell 56% to $105 million, or $0.73 per share.

Despite that steep decline, Lamb Weston beat the analyst consensus-adjusted estimate of $0.72 per share. It posted a more convincing pace with net sales, as forecasters were collectively modeling just $1.55 billion for the line item.

The company specializes in potato products, and demand for frozen spuds relative to their supply continued to be weak. Management also cited the quality of restaurant traffic as impacting the quarter’s results.

The restructuring plan has been revealed

Lamb Weston’s new restructuring program was probably the news that brought investors into the stock on Hump Day. The company announced that it is permanently closing a relatively old processing facility that is relatively expensive to operate. In addition, it is temporarily reducing a number of production lines and programs and trying to reduce operating expenses and capital expenditures (capex).

It quoted CEO Tom Werner as saying, “Together, we expect these actions to help us better manage plant utilization rates and alleviate some of the current demand imbalance in North America.”

Management made a downward adjustment to adjusted net income, forecasting it to be $600 million to $615 million ($4.15 to $4.35 per share). It reaffirmed its net sales outlook of $6.6 billion to $6.8 billion.