Company: LW
Filing Date: 2025-07-23
Form Type: 10-K
Source: 0001679273-25-000049
Chunk: 37

Company: Lamb Weston Holdings, Inc.
Filing Date: 2025-07-23
Form: 10-K
Item: Item 1A
Chunk 37
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 and results of operations. Our attempts to offset these cost pressures, such as through increases in the selling prices of some of our products, may not be successful or may not be sustainable. Higher product prices may result in reductions in sales volume, especially given the current highly competitive frozen potato product market and soft restaurant traffic and the volatility of the macroeconomic environment. To the extent that price increases are not sufficient to offset these increased costs adequately or in a timely manner, and/or if they result in significant decreases in sales volume, our business, financial condition, or results of operations may be adversely affected. Though we provide most of our customers with local/regional supply, products we manufacture at our one production facility in Canada and import to the U.S., as well as the 5% of our inputs, primarily edible oils and natural gas, that are sourced in Canada, are currently exempt from these tariffs as they are compliant with the United States-Mexico-Canada trading agreement. Despite the current exemptions, the implementation of new tariffs on imports from Canada, Mexico, China or other countries for an extended period and without specific exemptions for our products may adversely affect our business, financial condition and results of operations. Further, any retaliatory tariffs on U.S. products by other countries, or other trade protection measures by foreign countries in favor of their local producers of competing products, such as governmental subsidies, tax benefits, and other measures giving local producers a competitive advantage over Lamb Weston, may adversely affect our business and results of operations in those countries.

We also may not be successful in mitigating the effects of these cost increases through productivity initiatives or through our commodity hedging activity. Our future success and earnings growth depend in part on our ability to maintain the appropriate cost structure and operate efficiently in the highly competitive value-added frozen potato product category. We continue to implement profit-enhancing initiatives to improve the efficiency of our supply chain and general and administrative functions. These initiatives are focused on cost-saving opportunities in procurement, manufacturing, logistics, and customer service, as well as general and administrative functions. However, gaining additional efficiencies may become more difficult over time. In addition, there is currently no active derivatives market for potatoes in the U.S. Although we have experience in hedging against commodity price increases, these practices and experience reduce, but do not eliminate, the risk of negative profit impacts from commodity price increases. As a result, the risk management procedures that we use may not always work as we intend. To the extent we are unable to offset present and future cost increases, our business