Collect all the required ingredients before starting. Having everything—from the lamb and bacon to the vegetables and spices—on hand will make the cooking process more efficient and ensure each component contributes to the dish's rich flavors.
Add the bacon to a large skillet and cook over medium-high heat, stirring occasionally, until it’s evenly crisp and browned, about 10 minutes. Once done, use a slotted spoon to transfer the bacon to a paper towel-lined plate to drain. Keep the bacon fat in the skillet for later use.
In a large mixing bowl, combine the lamb, flour, salt, and pepper, tossing to coat the meat evenly. Brown the lamb in the bacon fat in the skillet over medium-high heat, ensuring it gets a nice sear on all sides. Once browned, transfer the meat to a stockpot, leaving about 1/4 cup of fat in the skillet for later use.
Sauté the onion and garlic in the reserved bacon fat over medium heat until the onion turns golden and fragrant. Add water to deglaze the skillet, scraping up any flavorful bits from the bottom. Transfer the onion mixture into the stockpot, then stir in the bacon, beef stock, and sugar. Cover the pot and let it simmer for 1 1/2 hours, allowing the flavors to meld together.
Stir the carrots, potatoes, onions, wine, thyme, and bay leaves into the stockpot. Lower the heat and let the stew simmer, covered, for about 20 minutes, or until the vegetables are tender and infused with the rich flavors of the broth.