March 9 (Reuters) - Activist investor Starboard Value urged Lamb Weston to accelerate operational improvements and cost cuts to help lift its stock price, in a letter on Monday, after disclosing that
Starboard pushes Lamb Weston to double cost cuts, review business after building stake
Starboard Value Urges Strategic Changes at Lamb Weston
Activist Investor Reveals Stake and Calls for Increased Cost-Cutting
March 9 (Reuters) - Starboard Value on Monday urged Lamb Weston to double its cost-cutting targets and review its international operations, as the activist investor revealed a stake in the frozen potato supplier.
Background: Previous Activist Involvement and Board Changes
The company, which supplies potato sides and appetizers to fast-food chains such as McDonald's and Yum Brands, had settled with activist stakeholder Jana Partners for board representation last year, avoiding a bruising proxy fight.
Starboard's Recommendations for Cost Reductions and Operational Review
Doubling Cost-Cutting Targets
Lamb Weston should aim for about $500 million in total cost reductions, Starboard said, up from the company's current plan to cut at least $250 million by the end of 2028.
Review of International Operations
The activist also called for a review of the company's Asia Pacific operations, citing rising competition and concerns that the business may be diverting focus from a broader turnaround.
Details on Starboard's Stake
The size of Starboard's stake was not immediately clear.
Starboard has been an investor "for a while" and recently increased its position, the Wall Street Journal reported on Sunday.
Financial Targets and Margin Goals
Setting New Financial Benchmarks
In its letter, the activist investor also urged the Lamb Weston board to set targets for adjusted selling, general and administrative expenses at 4.5% of revenue and a 25% core profit margin as a medium-term goal.
Rationale for Margin Targets
"A margin target, rather than a cost-reduction target, provides greater transparency and accountability by allowing investors to easily track the company's progress over time," Jeffrey Smith, managing member at Starboard, said.
Company Response and Recent Developments
Lamb Weston's Statement
Lamb Weston "values ongoing and constructive dialogue with its shareholders and appreciates productive feedback to drive long-term shareholder value", the company said in an emailed statement.
Financial Performance and Leadership Changes
Maintaining Forecasts Amid Market Pressures
The company in December kept its annual forecasts intact for a second time despite an upbeat quarter, against the backdrop of demand and commodity cost pressures.
Executive Appointments
Last month, Lamb Weston named James Gray as chief financial officer and beverage-industry veteran Jan Craps to a newly created executive chair role.
It had appointed insider Michael Smith as CEO last year following pressure from Jana Partners.
Stock Performance
Shares of the company were down 1.5% in early trading amid broader market weakness. They had declined around 37% in 2025.
(Reporting by Neil J Kanatt and Koyena Das in Bengaluru; Editing by Krishna Chandra Eluri and Sriraj Kalluvila)
