Lamb Weston, a major supplier of frozen French fries to global fast-food chains like McDonald’s, KFC, and Taco Bell, has named a new CEO after posting an unexpected loss in the year’s second quarter.
The Idaho-based company, which produces the equivalent of 80 million servings of fries daily worldwide, has faced mounting challenges as consumers scale back on spending for dining out, reported Yahoo!Finance, AP. Its financial struggles have not been a secret on Wall Street, with shares plummeting over 40% in 2024 alone.
In October, Lamb Weston decided to implement job cuts, close a plant, and reduce production in response to sagging demand.
Despite these efforts, the company’s performance continued to disappoint. With over 10,000 employees worldwide, the company’s troubles have raised concerns among investors. One of Lamb Weston’s most prominent investors, Jana Partners, publicly criticized the company’s leadership in a letter this week, pointing to significant missteps, including failing to anticipate the slowdown in consumer spending.
To address these issues, Lamb Weston announced that Chief Operating Officer Mike Smith would replace CEO Thomas Werner, effective January 1.
Werner will remain with the company in an advisory role during the transition. Smith, who has been with Lamb Weston since 2007 and was promoted to COO last year, is expected to bring a fresh perspective to the company’s leadership. Chairman W.G. Jurgensen expressed confidence in Smith’s ability to lead the company through its current challenges.
The announcement of the leadership change came on the heels of a disappointing financial report.
Lamb Weston posted a $36 million loss in the second quarter, compared to a $215 million profit during the same period last year. The company’s results significantly missed Wall Street’s expectations, with per-share earnings falling short by 36 cents. The unexpected downturn has caught investors off guard and has put additional pressure on the company to turn things around.
As Lamb Weston grapples with its financial difficulties, the leadership change marks a pivotal moment for the company. With Mike Smith stepping into the CEO role, investors hope the company can navigate its current challenges and return to profitability. However, the road ahead remains uncertain, and Lamb Weston will need to implement significant changes to regain its footing in the competitive food industry.