Tootsie Roll third-quarter net earnings fall 35% from a year earlier as costs bite

Tootsie Roll Industries, Inc. reported third-quarter 2026 net sales of $227,163,000, down $3,451,000 or 1% from $230,614,000 a year earlier, and net earnings of $23,216,000, $12,443,000 below the prior-year quarter. Net earnings per share fell to $0.31 from $0.48, a decline of $0.17 or 35%, the Chicago-based candymaker said in a press release dated October 21, 2026 that it filed with the SEC as Exhibit 99.1 to a Form 8-K the following morning.

Halloween shipments land in the fourth quarter

Chairman Ellen R. Gordon attributed the decline to “the timing of sales, including seasonal Halloween sales, between third and fourth quarter 2026 when compared to the prior year’s corresponding quarterly periods.” That describes a calendar shift rather than lost demand, but the release never quantifies how much revenue crossed the quarter boundary. Nine-month net sales were $528,594,000, down $1,731,000 from $530,325,000. Implied first-half net sales, meaning nine-month sales less third-quarter sales, were $301,431,000 against $299,711,000 in the equivalent two quarters of 2025, so the year-to-date sales shortfall was created almost entirely between July and September.

Trade promotions reduce reported revenue by design

The company is “continuing our higher support levels of our brands with increased trade promotions, as well as advertising”, Gordon said, adding that “Because trade promotions are accounted for as a reduction in reported net sales, these higher levels of trade promotions had some adverse effects on our reported net sales for third quarter and nine months 2026.” The accounting matters more than the wording: promotional spending is deducted from gross sales rather than booked as an operating cost, so a heavier promotional calendar lowers reported revenue even when shipments are unchanged. The release discloses no volume, tonnage or price-and-mix figures that would let a reader separate the two effects.

Cocoa eases while packaging and freight tighten

Input costs did the heavier damage. Gross margins were hurt by “higher unit costs for ingredients, primarily cocoa and chocolate, and packaging materials”, the company said. Cocoa is the one input moving in Tootsie Roll’s favor: management said “our cocoa and chocolate costs were more favorable in third quarter 2026 compared to first half 2026 and we expect this to continue in fourth quarter 2026”, while cautioning that “Cocoa commodities markets have retreated from their extraordinarily high price levels in 2025 but remain well above historical levels.” Packaging costs climbed as higher energy prices lifted unit costs for resin-based materials, an effect the company dates mainly to the third quarter. Freight was worse: “This cost increase accelerated in third quarter 2026 and we expect freight and delivery costs to remain elevated through fourth quarter 2026 and likely into 2027.”

Profit fell faster than sales as advertising bunched up

Net earnings equaled 10.22% of net sales in the third quarter, against 15.46% a year earlier. Advertising was “significantly increased and concentrated in the third quarter”, so part of the expense gap is timing that could reverse in the fourth quarter. Acquisition-related expenses of approximately $1,300,000 in the quarter, and $2,500,000 for the nine months, also reduced reported results. Investment income was lower, and the 2025 quarter contained a favorable cumulative adjustment for bond accretion on bonds bought at a discount. Tariff refund recoveries and a lower effective tax rate of 25.6%, down from 26.7%, were partial offsets. Nine-month net earnings were $54,224,000, $17,037,000 lower than a year earlier, with earnings per share of $0.72 against $0.95, a decline of $0.23 or 24%. Average shares outstanding slipped to 74,806,000 from 75,060,000; per-share figures for both years are adjusted for 3% stock dividends distributed April 3, 2026 and April 4, 2025.

Winis adds a Mexican brand without moving the totals

On September 1, 2026, the company acquired a confectionery business principally comprising the Winis brand, which is manufactured and sold in Mexico and which management calls complementary to the Tutsi brand sold by its existing Mexican subsidiary. Sales and operating results from the acquisition were not material to consolidated figures, and no purchase price was disclosed; the visible cost is the acquisition expense line.

What the two-page release leaves out

The document is a summary of sales and earnings, not a full financial statement. It carries no gross profit or operating income, no segment revenue, no balance sheet, no cash flow statement, no volume or pricing split, and no guidance. Nor does it contain any provider-identified analyst consensus, so no beat or miss can be computed; every comparison here is with the company’s own prior-year periods.

Fourth-quarter shipment timing is the next checkpoint

The next hard test is the company’s fourth-quarter and full-year 2026 results, which will show whether the Halloween volume that moved out of the third quarter reappears, and whether the expected cocoa relief holds against freight costs the company expects to stay high into 2027. For the risk factors behind those outcomes, including tariffs, the shift to natural colors, Halloween sell-through and the ability to pass on input costs, the release points readers to the annual report on Form 10-K for the year ended December 31, 2025.