Is Tootsie Roll fading?

Shares fall Monday and are down 11% in August. There are worries about its growth prospects and who will succeed its aging CEO and president.

By Charley Blaine Aug 26, 2013 7:23PM
Tootsie Rolls by Kristoffer Tripplaar / AlamyHere's the issue: Tootsie Roll (TR), a venerable American iconic candy, fell $1.94 to $31.95 on Monday.

Some of the decline was due to the overall stock market decline set off when Secretary of State John Kerry said the use of chemical weapons in attacks on civilians in Syria last week was undeniable.

But the stock was already off 5% when Kerry started to speak.

So what happened? There was no news from the company. It famously issues only the bare minimum of financial reports. It doesn't hold conference calls with analysts. It hasn't had any analyst coverage in two years.

But the stock did hit a 52-week high of $35.25 on Aug. 1 and has fallen 11% since. The Dow Jones Industrial Average ($INDU) is off 4.4% in the same time frame.

The stock was downgraded to sell last week by analyst Hunter Orr of Alpha Street Research, and there have been worries over the last year or so about its growth.

To be sure, Tootsie Roll has some of the best-known candy brands around, including Charms Blow Pops, Sugar Daddy caramels, Charleston Chews, Junior Mints, Dubble Bubble chewing gun, and Dots gumdrops.

Still, there are a number of uncertainties about the company.

The biggest is leadership and whether there's a succession plan. CEO Melvin Gordon is 93, the oldest CEO for a company listed on the New York Stock Exchange. His wife Ellen is the president. She's 83. Together, they control 46.8% of the class A shares and 82.2% of its class B shares.

There are some issues. Revenue of $544 million in the 12 months ended June 30 was off 5.7% from a year earlier. 2012 revenue of $549 million was up 3.3% from 2011. Earnings per share have been static since 2009.

The company faces ever stronger competition from Hershey (HSY), which has revenue of nearly $7 billion, and privately held M&M Mars (maker of M&Ms) and other confectioners.

And the stock has had a wildly volatile history. It hit $83.37 in 1993 and has $77.50 in 1998 but has been trading between $47 and $21 since 2000.

For the record, the Dow finished Monday down 64 points to 14,946. The Standard & Poor's 500 Index ($INX)  was down 7 points to 1,657. The Nasdaq Composite Index ($COMPX) had higher for most of the day but ended down slightly at 3,658.

Syria was the biggest problem for the market. But a weaker-than-expected durable goods orders report also hurt.

Crude oil (-CL) in New York fell 50 cents to $105.92 Brent crude fell 31 cents to $110.73.

Gold (-GC) fell $2.70 to $1,393.10. Silver (-SI) rose 27.2 cents to  $24.01. Gold is up 6.1% in August; silver is up 22.3%.

As my colleague Anthony Mirhaydari also noted, agricultural commodity prices jumped on Monday--  because of worries the farm harvests in the fall won't be as big as had been expected.

Tuesday brings the S&P/Case-Shiller Home Price Index and the Conference Board's August report on consumer confidence. Tiffany (TIF) and TIVO (TIVO) are among the corporate earnings reports due.

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81Comments
Aug 26, 2013 9:09PM
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So they had a bad day in the Markets, So what. Halloween is coming and there's always more Blow pops and Tootsie rolls in the bag than Hersey or Mars Bars. Charms Blow Pops, Sugar Daddy caramels, Charleston Chews, Junior Mints, Dubble Bubble chewing gun, and Dots gumdrops that looks like a list of some of the most popular Halloween candies. They might not be the biggest candy maker but they make some of the all time favorites. Wall Street only cares about money but when I buy candy at the store I've never seen a ticker there.

 

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MSN makes it sound like they're going bankrupt when it was just a crap day.
Aug 26, 2013 9:28PM
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They better NOt do away with my Tootsie Roll Candy...it is my favorite of all....LOve them...just got me a bag and am going to stock up next trip to store!!
Aug 26, 2013 10:04PM
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God bless Tootsie Rolls, an American icon and screw Wall Street, the biggest terrorist organization on this planet.
Aug 26, 2013 9:45PM
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When you are 93 and have more money than god you can tell wall street to piss off by not telling them anything.
Aug 26, 2013 9:31PM
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They can adopt me & I'll take over the company for them!!  Who's with me??
Aug 26, 2013 9:33PM
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Hang in there.  
Marijuana will soon be legal, and millions of people will want something sweet, handy, chewy, and chocolate-flavored that won't melt.  
Introduce new flavors... coffee, vanilla, banana, pistachio,   
You'll do well.
Aug 26, 2013 10:25PM
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In Clinton, Indiana on the Friday preceding Labor Day they kick off the "Little Italy Festival" with a parade.   All of the participants in the Parade throw candy to the spectators (kids).  It is amazing how the kids leave the "Tootsie Rolls" laying on the ground.    Here comes this 70 year old geezer (me) scooping up the Tootsies they don't want.  Times change; but, I still love them
Aug 26, 2013 9:42PM
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Hope not, I sure do enjoy a tootsie!

 

 

Aug 26, 2013 9:27PM
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Growing up I loved Tootsie Rolls.  Even the large ones. Used to buy them all of the time, even bought them for the snack counter at work.  They went really fast there.   Due to the change in their ingredients I stopped buying them because first and primarily they contain "hydrogenated oil" which is artery clogging stuff.  This maybe why other people have stopped buying them.  I think Tootsie Roll should reconsider their ingredients due to the fact that consumers have become more informed about additives, and ingredients in their foods.
Just a thought.
Aug 26, 2013 10:27PM
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I LOVE TOOTSY ROLLS.  I'VE BEEN EATING THEM FOR OVER 60 YEARS.  I'M GETTING HUNGRY FOR ONE RIGHT NOW.

Aug 26, 2013 10:47PM
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This time last year they were at 25, which was up from the year before. Now they are at 33. What's the problem?
Aug 26, 2013 10:04PM
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Tootsie Rolls are my favorite.  If they disappear, I'll go into withdrawal!!!
Aug 26, 2013 10:03PM
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They are not going away. Worst case scenario another candy company would buy them for the brands they own.

Aug 26, 2013 9:51PM
Aug 26, 2013 9:14PM
Aug 26, 2013 10:39PM
Aug 26, 2013 10:53PM
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John Kerry's comment on Syria hurt Tootsie Roll?  We have just about Mastered Degreed our companies out of business.  What a bunch of Maroons...  Never listen to analysts.  If they had a clue they would be playing the market...
Aug 26, 2013 9:10PM
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They're updating the brand. It is scheduled to be reintroduced as the "Barack Bar". This new confection will of course be full of nuts, will melt at room temperature and break into tiny bite-sized pieces under just the slightest amount of pressure. 

A companion candy the "Biden Bar" is being test marketed in limited areas. The "Biden Bar" will be packaged in an old leathery bag, full of hair plugs and have absolutely no taste whatsoever.
Aug 26, 2013 10:34PM
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This sounds like the Twinkie scare all over again.  I hope someone will continue to make Tootsie Rolls, I LUV em!
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