Lamb Weston stock collapses after shortfall and gross margin warning

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Lamb Weston Holdings Inc. LW,
-3.95%
shares fell 8.6% pre-market Thursday after the potato and vegetable company reported fiscal first quarter earnings and sales that beat expectations. Net income totaled $ 29.8 million, or 20 cents per share, down two-thirds from $ 89.3 million, or 61 cents per share, last year. Sales of $ 984.2 million were down from $ 871.5 million last year. The FactSet consensus was for EPS of 37 cents and sales of $ 1.00 billion. Although restoration activities have improved, challenges remain. “[T]The impact of the extreme summer heat that negatively affected potato crops in the Pacific Northwest, combined with industry-wide operational challenges, including very high input and transportation costs. inflation, labor availability and disruptions in the upstream and downstream supply chain, will result in higher costs as the year progresses. “As a result, we expect our gross profit margins to remain below pre-pandemic levels through fiscal 2022.” The company is raising prices, adjusting worker schedules and taking other steps to compensate for these issues . Lamb Weston expects fiscal 2022 net sales to be above the long-term goal of a low to mid single-digit figure. Factset’s consensus is forecasting sales of $ 4.119 billion, which implies a 12.2% increase. is down 20.8% for the year to date while the S&P 500 SPX index,
+1.46%
gained 16.2% over the period.


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