Lamb Weston faces probe after ERP failure causes $135 million sales loss
Bragar Eagel & Squire, P.C. is investigating Lamb Weston Holdings, Inc. for potential fiduciary breaches related to a failed ERP system rollout. The system failure caused a $135 million negative impact on net sales, a $72 million hit to net income, and a $330 million reduction in fiscal 2024 sales guidance. The investigation follows a class action complaint filed on June 13, 2024, and investors are encouraged to contact the firm to discuss their rights.
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Bragar Eagel & Squire, P.C. is investigating potential claims against Lamb Weston Holdings, Inc. on behalf of long-term stockholders following a failed ERP system rollout that negatively impacted net sales by $135 million. The investigation concerns whether the board of directors of Lamb Weston breached their fiduciary duties to the company. This follows a class action complaint filed against Lamb Weston on June 13, 2024, with a Class Period from July 25, 2023, to April 3, 2024.
Allegations Regarding ERP System
The complaint alleges that throughout the Class Period, defendants made material misrepresentations and omissions regarding the design and implementation of Lamb Weston’s new ERP system. Specifically, the company represented that the new system had "strengthen[ed] [its] operational infrastructure" and downplayed implementation issues as merely "usual bumps." The company also stated that its financial guidance for fiscal 2024 appropriately accounted for any negative financial impact associated with the system’s deployment.
Financial Impact and Guidance Reduction
The truth emerged on April 4, 2024, when Lamb Weston reported financial results for its fiscal third quarter 2024 and disclosed significant problems with the ERP transition. The issues caused the company to lose over $130 million in sales during the third quarter and led to a significant reduction in its full fiscal year sales guidance. The unsuccessful transition resulted in reduced visibility into finished goods inventory at distribution centers, causing shipment delays and cancelled orders.
| Metric | Impact Amount |
|---|---|
| Net Sales Impact | $135 million |
| Net Income Impact | $72 million |
| Adjusted EBITDA Impact | $95 million |
| Fiscal 2024 Sales Guidance Cut (Midpoint) | $330 million |
Lamb Weston disclosed that it expected sales volumes in its fiscal fourth quarter 2024 to be negatively impacted as affected customers turned to competitors. Following these disclosures, the price of Lamb Weston stock declined by $19.59 per share, or over 19%.
Contact Information for Investors
Long-term stockholders of Lamb Weston who wish to discuss their legal rights or learn more about the claims may contact Bragar Eagel & Squire partners Brandon Walker or Melissa Fortunato. Investors can reach the firm by email at investigations@bespc.com or by telephone at (212) 355-4648. There is no cost or obligation to participate in the investigation.
What is the estimated timeline for fully resolving the ERP system issues and restoring normal operations?
How likely is it that Lamb Weston can win back customers who switched to competitors during the disruption?
What specific governance changes or board-level accountability measures might result from the fiduciary duty investigation?
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