[ad_1]
EAGLE, IDAHO – Softer-than-expected foodservice traffic in North America and key international markets combined with the rocky rollout of a new enterprise resource planning (ERP) software negatively impacted potato processor Lamb Weston Holdings, Inc. during the third quarter of fiscal 2024.
“Overall, global french fry demand remains resilient, but we believe it’s currently at or below the historical annual growth rate of about 2% to 4%,” said Tom Werner, president and chief executive officer, during an April 4 conference call with securities analysts. “According to restaurant industry data providers, restaurant traffic trends in the US have been generally flat to slightly down during the past six to nine months as consumers continue to adjust to the cumulative effect of inflation on menus.”
Quick-service restaurant traffic was flat during the third quarter after growing modestly during the first half of fiscal 2024, according to Lamb Weston Holdings. Traffic at full-service restaurants has declined each quarter during the fiscal year.
Mr. Werner added that outside of the United States, restaurant traffic has continued to increase when compared to the previous year, but growth has slowed sequentially from the company’s fiscal second quarter.
“Similar to the US, we believe traffic in these markets is also affected by consumers adjusting to the cumulative effect of inflation as well as other macro headwinds,” he said.
Adding to the pressure on the company was the rollout of the ERP software that did not go as planned. As a result, disruptions were experienced in receiving and processing, customer orders, trade pricing and promotion management, managing inventories and warehousing, scheduling and transportation and shipments, invoicing customers and treasury and cash management, according to the company.
“We experienced significant challenges with inventory visibility at distribution centers, which led to shipment delays, canceled orders and ultimately, lower-than-expected volumes in the quarter,” Werner said. “In particular, we had more difficulty filling shipments of mixed product loads, which are generally higher margin than shipments of single product loads. This pressured margins in the quarter.”
The company estimated the disruptions reduced net sales by about $135 million and volume growth by approximately 8% during the quarter.
“We also estimate that adjusted EBITDA was negatively impacted by approximately $95 million, with more than half of that due to lower sales and unfulfilled customer orders and the remainder due to incremental costs and expenses directly related to the transition,” Werner said.
For the quarter ended Feb. 25, Lamb Weston’s net income fell 17% to $146 million, equal to $1.01 per share on the common stock, down from $175 million, or $1.22 per share, during the same period of the previous year.
Quarterly sales rose 16% to $1.46 billion from $1.25 billion the year before.
Bernadette M. Madarieta, chief financial officer, said the sales increase was driven entirely by the consolidation of the company’s business in the EMEA region.
“If we exclude the incremental sales from the EMEA acquisition, net sales declined $152 million, or 12%,” she said. “Price/mix was up 4% as we continued to benefit from the inflation-driven pricing actions taken in fiscal 2023 and pricing actions taken this year in both our North America and international segments.
“However, unfavorable mix related to the type of orders we were able to fill during the ERP transition partially offset the benefit of the pricing actions. In addition, lower freight charges to customers were nearly a 5-point headwind, which was driven by lower volume shipped and the pass-through of lower freight rates when shipping products to customers.”
The company updated its fiscal 2024 outlook by reducing its net sales target to a range of $6.54 billion to $6.6 billion from the previous range of $6.8 billion to $7 billion.
“Our updated sales target implies sales of $1.69 billion to $1.75 billion in our fiscal fourth quarter, which is flat to up 3% compared with the same period a year ago,” Madarieta said. “We expect volumes in the fourth quarter will decline mid-single digits, which is down from our previous target of positive volume growth.
“The primary reasons for the change include our expectation that soft restaurant traffic trends in North America will continue longer than we initially anticipated. And that restaurant traffic trends in several of our key international markets have also softened more than expected.”
[ad_2]
Source link
Excellent blog here! Also your website so much up
very fast! What web host are you the usage of? Can I am getting your affiliate
hyperlink to your host? I want my website loaded up as fast
as yours lol
I like it whenever people come together and share views.
Great website, keep it up!
Whats up very nice web site!! Man .. Beautiful .. Superb ..
I’ll bookmark your blog and take the feeds additionally? I am
happy to search out a lot of useful information here
within the submit, we need develop more techniques on this regard, thanks for
sharing. . . . . .
Thanks for sharing your thoughts. I really appreciate your efforts and I will be waiting for your further write ups thank you once again.
Thanks for your personal marvelous posting! I quite enjoyed
reading it, you’re a great author.I will make certain to bookmark your blog and will eventually
come back down the road. I want to encourage you continue your great work,
have a nice afternoon!
Hello to every body, it’s my first pay a quick visit of this website; this blog contains remarkable and in fact fine material in favor of
readers.
Hey there just wanted to give you a quick heads up and let you know a few of
the pictures aren’t loading correctly. I’m not
sure why but I think its a linking issue. I’ve
tried it in two different internet browsers and both show the same results.
Hello, i believe that i saw you visited my website thus i got here to return the favor?.I’m attempting to in finding issues to improve my website!I suppose its good enough to make use of some of your ideas!!
Hey there! Someone in my Facebook group shared this website with us
so I came to look it over. I’m definitely enjoying the information. I’m book-marking
and will be tweeting this to my followers! Terrific blog and outstanding design and
style.
I believe this is among the such a lot vital information for me.
And i am happy studying your article. However wanna observation on some general issues, The website
taste is ideal, the articles is really great : D.
Just right process, cheers
all the time i used to read smaller posts which also clear their motive, and that is also happening with this piece of writing which I am reading here.
Right away I am ready to do my breakfast, after having my breakfast coming yet again to read additional news.
Having read this I thought it was rather enlightening.
I appreciate you spending some time and energy to put this information together.
I once again find myself personally spending a lot of time both reading and leaving comments.
But so what, it was still worth it!
hi!,I love your writing so so much! proportion we be in contact extra approximately your article on AOL?
I require an expert in this house to solve my problem.
Maybe that is you! Looking forward to peer you.
I love your blog.. very nice colors & theme. Did you create this website yourself or did
you hire someone to do it for you? Plz answer back as I’m looking
to design my own blog and would like to find out where u got this from.
many thanks
It’s an amazing post designed for all the internet users; they will
obtain benefit from it I am sure.
This piece of writing will help the internet visitors for building up
new web site or even a weblog from start to end.
I was wondering if you ever thought of changing
the page layout of your blog? Its very well written; I love what youve got to say.
But maybe you could a little more in the way of content so people could connect with
it better. Youve got an awful lot of text for only having one
or 2 pictures. Maybe you could space it out better?
Hey I know this is off topic but I was wondering if you knew of
any widgets I could add to my blog that automatically tweet
my newest twitter updates. I’ve been looking for a plug-in like this for quite some time and was hoping
maybe you would have some experience with something like this.
Please let me know if you run into anything. I truly enjoy reading your blog and
I look forward to your new updates.
After going over a handful of the articles on your site,
I seriously appreciate your way of writing a blog. I saved
as a favorite it to my bookmark site list and will be checking back soon. Please check out
my website too and tell me how you feel.
If you are going for finest contents like myself, only visit this website every day because it presents feature contents, thanks
I always spent my half an hour to read this web site’s articles
all the time along with a cup of coffee.
Incredible quest there. What happened after? Good luck!
I could not refrain from commenting. Very well written!