(Reuters) -Lamb Weston on Thursday named insider Michael Smith to replace its CEO following pressure from activist investor Jana Partners to revamp its top management or sell itself.
Its shares tumbled 19% in premarket trading after the frozen potato snacks maker trimmed its annual profit and sales forecasts.
Smith, currently the operating chief, will take over from Thomas Werner on Jan. 3, the company said. Smith had joined Lamb Weston in 2007.
Jana Partners did not immediately respond to a Reuters request for comment.
The activist investor revealed a roughly 5% stake two months ago. In a letter to Lamb Weston's board this week, Jana said the company's management had wasted a chance to sustain and grow shareholder value.
Grape Nuts cereal parent Post Holdings (NYSE:POST) was working with investment bankers toward a potential buyout of Lamb Weston, Reuters reported last week.
Lamb Weston, which was spun off from packaged foods maker Conagra Brands (NYSE:CAG) in 2016, has a market cap of about $11 billion.
Demand for Lamb Weston's frozen potato sides has weakened from restaurants and retailers in the U.S. as cost-conscious consumers avoid pricier menus and shop for cheaper pantry alternatives.
In October, the company announced job cuts and said it would curtail production to save costs.
Lamb Weston will look to further reduce manufacturing and supply chain costs, as well as operating expenses to improve profitability, outgoing CEO Werner said, while warning of "challenging conditions" to persist through fiscal 2026.
The company now expects fiscal 2025 net sales of $6.35 billion to $6.45 billion, compared with its prior forecast of between $6.6 billion and $6.8 billion.
It cut its annual adjusted profit expectations to $3.05 to $3.20 per share from $4.15 to $4.35.
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