Tootsie Roll's Earnings Drop 35% as Costs and Timing Bite

The Tip Desk · October 24, 2026 · 3 min read

Third-quarter net earnings fell to $0.31 a share from $0.48 a year earlier as cocoa, packaging and freight costs rose and Halloween sales shifted later.

Tootsie Roll Industries (TR), the Chicago candy maker, reported third-quarter 2026 net earnings of $23.22 million, or $0.31 a share, down 35% from $35.66 million, or $0.48 a share, a year earlier.

Net sales were $227.16 million, down 1% from $230.61 million in the year-ago quarter. That followed a second quarter in which sales of $151.94 million were also down 1% from $153.19 million a year earlier.

Chairman Ellen R. Gordon said the third quarter and the nine months ended September 30 were adversely impacted by the timing of sales, including seasonal Halloween sales, between the third and fourth quarters of 2026 versus the prior year. Higher trade promotions, which are accounted for as a reduction in reported net sales, also had some adverse effect on reported net sales.

Gross margins in the third quarter and nine months were adversely affected by higher unit costs for ingredients, primarily cocoa and chocolate, and packaging materials. Cocoa and chocolate costs were more favorable in the third quarter than in the first half of 2026, and the company said it expects that to continue in the fourth quarter. Cocoa commodities markets have retreated from extraordinarily high 2025 price levels but remain well above historical levels.

Higher energy costs drove increases in unit costs for resin-based packaging materials, contributing to higher packaging costs primarily beginning in the third quarter. Elevated energy costs also contributed to significant increases in freight and delivery expenses, reflecting higher fuel surcharges from diesel. The company said that freight-cost increase accelerated in the third quarter and that it expects freight and delivery costs to remain elevated through the fourth quarter of 2026 and likely into 2027. Increased costs, including inflation, for plant labor and benefits, maintenance, and supplies also had an adverse effect on margins versus the year-ago periods.

Advertising was significantly increased and concentrated in the third quarter, so the third quarter and nine months reflect significantly higher advertising expense than the corresponding 2025 periods. The company said it is continuing higher support levels of its brands with increased advertising and trade promotions.

On September 1, 2026, the company acquired a confectionery business principally comprising the Winis brand, manufactured and sold in Mexico. Management said the product line will be complementary to its existing Mexican subsidiary’s Tutsi-brand business. Sales and operating results of the acquisition were not material to consolidated results. The company recognized about $1.30 million of acquisition-related expenses in the third quarter and $2.50 million in the nine months, which had an adverse effect on 2026 results versus the year-ago periods.

Net earnings did benefit from some tariff refund recoveries. Investment income from marketable securities was lower than in the comparable 2025 periods; third-quarter 2025 included a favorable cumulative bond-accretion adjustment not previously reported. Effective income tax rates were 25.6% in the third quarter of 2026 versus 26.7% in the third quarter of 2025.

For the nine months ended September 30, net sales were $528.59 million, down $1.73 million from $530.33 million a year earlier. Net earnings were $54.22 million, or $0.72 a share, compared with $71.26 million, or $0.95 a share, in the year-ago nine months.

The company said it is focused on the longer term and is continuing to make investments in plant manufacturing operations to meet new customer and consumer product demands, achieve product-quality improvements, expand capacity in certain product lines, and increase operational efficiencies.