French fry giant Lamb Weston reports sales down 16% during fourth quarter
Lamb Weston, one of the world’s largest french fry makers, reported net sales were down 16% during the fourth quarter of its fiscal year.
The publicly traded company reported net sales of $847 million during the period of April 1-June 30.
Lamb Weston’s net sales for the year were actually up 1% to $3.792 billion, which, in relation to its lackluster fourth quarter, shows the impact COVID-related foodservice restrictions have had on business. During the fourth quarter, Lamb Weston’s foodservice sales were down 44% from last year.
Numbers have been improving since the start of June, when some restaurants began reopening in limited capacity. Shipments since June 1 were 85% of previous year levels in the U.S. and China and 75% of normal levels in Europe.
Company President and CEO Tom Werner issued the following statement:
“The final months of fiscal 2020 were some of the most challenging in our company’s history. Government efforts worldwide to slow the spread of COVID-19, including restrictions on restaurants and other foodservice operations, as well as shelter-in-place orders, abruptly reduced near-term demand for frozen potato products, which significantly impacted our sales and earnings in the fourth quarter,” said Tom Werner, President and CEO. “During this time, we have prioritized the health and safety of our Lamb Weston team, and worked closely with our customers and suppliers as they manage through this uncertain environment. In addition, we took steps to strengthen our financial liquidity, and to position our manufacturing and commercial operations for success in fiscal 2021 and beyond.
“As states began to reopen, we saw clear evidence of frozen potato demand steadily strengthening across our restaurant and foodservice channels. In the aggregate, french fry demand from most of our quick service restaurant customers in North America and our international markets, which together comprised a majority of our sales, rebounded substantially by the end of June. Although fry demand at full-service restaurants remains well below that of a year ago, it has also gradually improved as more states ease on-premises dining restrictions. Fry demand by our ‘non-commercial’ customers — such as hotels, schools and universities, and sporting venues — remains very soft. Retail demand continues to be a bright spot for the category and for Lamb Weston. After rising sharply in the latter half of the fourth quarter as consumers stepped-up food-at-home purchases, category growth began to normalize in some markets, but in total continues to be above historical rates.
“This steady improvement in category growth is encouraging, but there is still a great deal of uncertainty regarding its sustainability given the pace of economic recovery, consumer behavior, and governments either postponing lifting dining restrictions or reinstating restrictions on restaurants in response to rising COVID-19 infections in many states. Accordingly, we are deferring providing a financial outlook until we gain more clarity on the demand environment going forward. Instead, we have provided some observations on what we have seen so far in our first quarter of fiscal 2021. Although we continue to face an unprecedented challenging environment in the near term, we remain confident in the long-term health and structure of the category, as well as our ability to execute on our strategies, support our customers, generate sustainable top- and bottom-line growth, and create value for our stakeholders.”
Lamb Weston’s full year-end report can be found here.