What to expect when Lamb Weston (LW) reports its Q2 2025 earnings results

Shares of Lamb Weston Holdings, Inc. (NYSE: LW) were down over 1% on Friday. The stock has gained 13% over the past three months. The frozen potato products maker is scheduled to report its second quarter 2025 earnings results on Thursday, December 19, before market open. Here’s a look at what to expect from the Q2 report:

Revenue

Analysts are projecting revenue of $1.67 billion for Lamb Weston in Q2 2025, which represents a decline of more than 3% from the same quarter a year ago. In the first quarter of 2025, net sales declined 1% year-over-year to $1.65 billion.

Earnings

The consensus estimate for earnings per share in Q2 2025 is $1.03, representing a decline of nearly 30% from the prior-year period. In Q1 2025, adjusted EPS decreased 55% YoY to $0.73.

Points to note

Lamb Weston has been facing challenges in terms of softness in restaurant traffic and weak demand for frozen potato products. It anticipates these headwinds to continue through fiscal year 2025, which is not a good sign for the second quarter.

Last quarter, LW saw a slight improvement in restaurant traffic trends in the US as quick-service restaurants (QSRs) offered more promotions. Although overall US restaurant traffic declined on a year-over-year basis, it witnessed a pickup on a sequential basis. However, even as traffic trends seem to be improving, customers appear to be trading down in serving size i.e. opting for small fries instead of medium fries. This is anticipated to negatively impact volumes.

In Q1, the company saw volumes decline 3% due to slow restaurant traffic, customer share losses, impacts from the exit of certain lower-price and lower-margin business in Europe, and the impact of a voluntary product withdrawal. The volume decline was partly offset by growth in key international markets.

Sales in the North America segment decreased 3% YoY in Q1 while volumes fell 4% due to customer share losses and a drop in restaurant traffic in the US. Sales in the International segment rose 4% in Q1 while volumes dropped 1%, mainly due to impacts from the exit of lower-price and lower-margin business in Europe. These business exits are expected to continue to be a headwind in Q2 2025.

Lamb Weston has been dealing with higher costs that are weighing on profits. In Q1, adjusted gross profit declined by $137.2 million to $353.1 million, mainly due to higher manufacturing costs per pound, lower sales volumes, higher warehouse costs, and impacts from the voluntary product withdrawal. The higher manufacturing costs per pound largely reflected input cost inflation.

In order to drive operational and cost efficiencies, the company announced a restructuring plan last quarter. The plan includes the closure of its Connell manufacturing facility, the temporary curtailment of certain production lines and schedules across its manufacturing network, job cuts and a reduction in capital expenditures. Updates on this front can be expected in the Q2 report.