Tootsie rolls up record sales

by Eric Schroeder
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CHICAGO — Engaged in the manufacture and distribution of confectionery products for more than 116 years, Tootsie Roll Industries, Inc. experienced record sales and strong earnings in fiscal 2012 behind effective marketing and selling programs as well as higher price realization, according to the company.

In the year ended Dec. 31, 2012, net income at Tootsie Roll totaled $52,004,000, equal to 89c per share on the common stock, up 18% from $43,938,000, or 74c per share, in fiscal 2011.

Net sales rose 3% to a record $545,985,000, up from $528,369,000. Approximately 23.5% of product sales came from Wal-Mart Stores, Inc. in fiscal 2012, the company said in a March 1 annual report filing with the U.S. Securities and Exchange Commission.

In the company’s letter to shareholders, Melvin J. Gordon, chairman and chief executive officer, and Ellen R. Gordon, president and chief operating officer, noted the company’s competitive advantage lies in its well-known brands that “offer high dollar volumes for retailers and attractive values for consumers.”

“In 2012, successful targeted promotions and high consumer awareness of our core brands led to continued success in important market niches,” Mr. and Mrs. Gordon said. “Once again, Halloween was our largest selling period. Sales were driven by focused promotional programs, particularly in the high volume grocery, mass merchandise, drug, warehouse club and dollar store trade channels. Packaged goods, as well as mixed bag assortments of our most popular items, were once again successful in these channels.”

Mr. and Mrs. Gordon said Tootsie Roll experienced good international results in 2012, as sales increased in Canada behind expanded offerings in dollar stores. Sales also increased in Mexico, where Christmas proved to be the most significant candy selling season for the company in the country. Export also grew in 2012 with new distribution in several markets, including Europe, the Middle East and China.

Tootsie Roll, which relies on sugar, corn syrup and soybean oil as ingredients in many of its products, said that although the company experienced moderating costs for some ingredients in 2012 compared to 2011, unit costs for certain ingredients, packaging materials, freight and delivery, wages and benefits, and plant operations continued to increase further in 2012 compared to 2011.

“The company has made progress toward restoring margins to their historical levels before the increases in commodity costs in recent years, but margins remain below historical levels prior to these increases in commodity and other input costs,” the company said. “Restoring these margins and coping with the effects of some ongoing high commodity costs continue as part of the company’s long-term challenge.”
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