Lamb Weston Holdings Inc. LW, -5.73% shares sank 8.6% in Thursday premarket trading after the potato-and-vegetable company reported fiscal first-quarter profit and sales that missed 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. Though foodservice business improved, there are challenges ahead. “[T]he impact of extreme summer heat that negatively affected potato crops in the Pacific Northwest, combined with industrywide operational challenges, including highly inflationary input and transportation costs, labor availability, and upstream and downstream supply chain disruptions, will result in higher costs as the year progresses, and significantly pressure our earnings,” said Chief Executive Tom Werner in a statement. “Accordingly, 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 offset these problems. Lamb Weston expects fiscal 2022 net sales to be above the long-term target of low-to-mid single digits. The Factset consensus is for sales of $4.119 billion, implying an increase of 12.2%. Lamb Weston stock is down 20.8% for the year to date while the S&P 500 index SPX, +1.47% has gained 16.2% for the period.
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