Lamb Weston's board of directors have approved a $250 million increase in its share repurchase program, in light of its plunging stock price in the second quarter.
In an effort to offset the stock's sinking price with strategic buybacks, Lamb Weston Holdings Inc. initiated a restructuring plan that included production cuts and layoffs with the goal of saving $55 million annually.
The company that specializes in French fries, tater tots and sweet potato side dishes, is trading at $61.65, reported the New York Stock Exchange, nearly a 24% decline from the last close.
The $250 million increase raises the total to $750 million.
With second quarter fiscal results revealing declines in sales, income and earnings, the annual net sales for French fries were revised to anywhere between $6.35 and $6.45 billion from $6.6 through $6.8 billion.
Lamb Weston is targeting a 1 to 4% sales growth in the second quarter of 2025.
The declines are attributed to high manufacturing and operational costs and a global decline in demand for potatoes, the main ingredient of French fries, said the report.
"Our financial results in the second quarter were below our expectations," said Tom Werner, CEO and president. "Higher-than-expected manufacturing costs and softer volumes accounted for the shortfall."
Net sales dropped by 8% to $1.6 billion, while net income plunged to a loss of $36 million or $0.25 a share.
Adjusted earnings per share fell to $0.66, down 54% from last year for the French fry maker.
The board of directors increased the quarterly dividend to $0.37 per share.
Michael J. Smith, the current chief operating officer, will replace Tom Werner as chief executive officer on January 3, 2025.
