One of World's Biggest Frozen French Fry Makers Is Struggling

Lamb Weston, a leading producer of frozen French fries for global fast-food giants including McDonald's, KFC, and Taco Bell, has announced Mike Smith as its new CEO following an unexpected $36 million second-quarter loss. This development comes as consumers reduce spending on dining out, impacting sales. Thomas Werner, the outgoing CEO, will transition to an advisory role. Despite a strategic succession plan, shares plummeted over 23% on Thursday, highlighting investor concerns about the company's performance amidst a challenging market environment.

Jana Partners, a major investor, recently criticized Lamb Weston for "chronic mis-execution" and poor financial decision-making, arguing that simply replacing the CEO with another long-standing executive is insufficient. Jana urged major changes to the board or a potential sale, demanding accountability for what it terms as the latest "stick in the eye" to shareholders. With a 40% drop in stock value this year, Lamb Weston is under pressure to address operational and strategic missteps that have resulted in its diminished financial health.

The challenging landscape, marked by inflation and shifting consumer habits post-pandemic, has seen fast-food chains, such as McDonald's, struggling with declining foot traffic. McDonald's, a key client for Lamb Weston, experienced a 1.5% drop in same-store sales last quarter, partly due to weakened demand in China. (This story was generated by Newser's AI chatbot. Source: the AP)