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Frozen french fries taste test for feature in Food.
Frozen french fries photographed for Food in Washington, DC.

Lamb Weston soars on big earnings beat and cost-cutting plans

The french fry maker said its turnaround plan will cook up hundreds of millions of savings in the coming years.

Nia Warfield

Lamb Weston shares jumped 17% Wednesday after the frozen potato producer topped Q4 expectations and doubled down on its cost-cutting plan.

Diluted earnings per share came in at $0.85. Excluding one-time items, adjusted EPS were $0.87, well above the $0.63 analysts expected. Meanwhile, revenue hit $1.68 billion, beating Wall Street’s forecast of $1.59 billion.

Lamb Weston is one of the world’s largest frozen potato processors. The quarter got a boost from an 8% jump in volume thanks to new contract wins, though that was partly weighed down by slower global restaurant traffic.

As the company faces some operational pressure, it’s working to reset costs and streamline the business. Lamb Weston also outlined additional cost cutting, expecting to rack up at least $250 million of savings by the end of fiscal 2028.

In a note Wednesday, Barclays analysts said the company’s better-than-expected volume growth helps restore credibility, while its clearer cost-cutting targets offer “incremental visibility” into a turnaround. The firm has an overweight or “buy” rating on the stock with a $61 price target, about 5% above current trading levels.

Looking ahead, Lamb Weston expects a stronger second half of the year, with full-year net sales projected between $6.35 billion and $6.55 billion — largely in line with consensus estimates of $6.40 billion.

Lamb Weston shares are still down about 13% year to date.

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Powering the positive earnings report was the company’s AI-related revenue, which grew 84% in the fourth quarter and now makes up over a third of total revenue. Investors seem to think the increased demand for servers could have trickle-down effects for other companies.

“The company’s results and commentary reinforced the outlook for strong AI-infrastructure demand while indicating resilient broader traditional server and storage spending,” wrote Woo Jin Ho, a senior technology analyst at Bloomberg Intelligence. “Lenovo’s $21 billion AI-server pipeline and remarks that demand is outpacing supply support Dell’s AI-demand momentum and point to robust orders.”

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Ross Stores surges as Q1 results beat expectations, full-year guidance raised

Ross shares are rising after the company delivered strong Q1 results, with sales topping Wall Street’s projections.

The stock soared 6.3% just after the open.

Key numbers:

  • Earnings per share of $2.02 vs. $1.47 year over year (estimate: $1.72).

  • Sales of $6.01 billion, up 21% year over year (estimate: $5.61 billion).

  • Comparable sales growth of 17% (estimate: 8.58%).

CEO Jim Conroy attributed the results to better traffic in stores. “Customer traffic was the primary driver of the strong sales trend as compelling merchandise assortments, higher customer acquisition and engagement from our ongoing marketing initiatives, and an improved in‑store experience are resonating with shoppers.”

The company also noted that transaction volume grew across all key demographics, including “income levels, ethnicities, and age groups, including younger customers.” Sales were also likely buoyed by standard seasonal tailwinds, including consumer spending from tax refunds.

Backed by the strong quarter, the company lifted its full-year targets. Ross now projects same-store sales growth of 6% to 7%, up from the prior forecast of 3% to 4%, topping Wall Street’s estimate of 4.64%. It boosted its annual EPS guidance to a range of $7.50 to $7.74, versus the prior outlook of $7.02 to $7.36.

Ross Stores has been one of the retail sector’s standout performers this year, rising around 20% year to date as of Thursday’s close.

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