Here's Why Lamb Weston Stock is Down More Than 30% in 3 Months

Core Viewpoint - Lamb Weston Holdings, Inc. is facing significant challenges due to overcapacity in the global market, declining restaurant traffic, and rising manufacturing costs, leading to a decline in both revenue and profit margins [1][10]. Financial Performance - In the second quarter of fiscal 2025, Lamb Weston reported a year-over-year decline in both top and bottom lines, missing the Zacks Consensus Estimate [1]. - The company's stock has decreased by 33.5% over the past three months, underperforming the broader industry, which declined by 4.5% [2]. Volume and Market Challenges - The company experienced a 6% decrease in volume in the second quarter due to softened global restaurant traffic, with North America and international markets seeing declines of 5% and 6%, respectively [5][6]. - Lamb Weston is facing heightened competition, resulting in customer share losses and sluggish demand in the frozen potato market [5]. Cost Pressures - Rising manufacturing costs, particularly for raw potatoes, have negatively impacted profit margins, with transportation and warehousing costs also increasing significantly [7]. - The company reported a $134.9 million drop in quarterly adjusted gross profit and a $95 million decrease in adjusted EBITDA [7]. Revised Financial Targets - Lamb Weston has lowered its annual net sales target range for fiscal 2025 to $6.35-$6.45 billion, down from $6.6-$6.8 billion, reflecting increased competitive pressures and challenges in both North America and international markets [8][9]. - The adjusted earnings per share (EPS) forecast has been revised to $3.05-$3.20, down from the previous projection of $4.15-$4.35 [9].