Lamb Weston Holdings trimmed its annual sales and profit forecasts after missing Wall Street estimates for quarterly results on slowing demand for its frozen potato snacks.
Margins of consumer staple peers like Hormel Foods and Sysco are pressured as prices and borrowing costs increase, along with slowing demand leading to a more pronounced discrepancy between dining out and eating at home.
Volumes fell 16% in the third quarter, partly due to soft restaurant traffic trends in North America and other key international markets.
The company said its results were also hit by the implementation of a new Enterprise Resource Planning (ERP) system in North America which impacted the transparency of finished goods inventories at its distribution centres affecting the fulfilment of customer orders.
The shift to the ERP system negatively impacted quarterly results more than expected, CEO Tom Werner said.
Annual Report
Lamb Weston forecast annual net sales between $6.54 billion (€6.02 billion) and $6.60 billion (€6.07 billion), compared to prior forecasts of $6.8 billion (€6.25 billion) and $7.0 billion (€6.44 billion), missing analysts' average estimate of $7.26 billion (€6.68 billion), according to LSEG.
The company forecast annual adjusted profit to range between $5.50 and $5.65 per share, compared to a prior forecast of $5.70 to $6.15.
The results come at a time when packaged food peers, including General Mills opted to hike prices due to tepid demand amid rising rentals and borrowing costs, pushing customers to allocate their budgets cautiously.
The Idaho-based company posted quarterly net sales at $1.45 billion (€1.34 billion), compared to expectations of $1.65 billion (€1.52 billion).
Excluding items, the fast-food chain posted $1.2 per share missing estimates of $1.45 per share.
