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As Halloween approaches, the festive season brings both opportunities and challenges for confectionery makers and retailers. Record-high cocoa prices are squeezing margins and threatening to push candy prices higher, even as companies like Mondelez and Hershey navigate shifting consumer behavior and input cost volatility. While some players are signaling resilience through revenue growth and strong StarMine model scores, analysts remain cautious on earnings surprises.

At the same time, retailers are leaning on aggressive discounting strategies to spur demand for costumes and décor. The discount penetration for costumes and accessories has surged to 83%, with average discounts at 36%, the highest since pre-pandemic levels, suggesting aggressive promotional strategies to drive demand.

Trick or treat

Consumers may be spooked by higher chocolate prices this Halloween as record cocoa costs continue to pressure margins. Rising input costs are likely to translate into higher prices for smaller-sized Halloween candy bars.

Mondelez International, with brands such as Sour Patch Kids and Cadbury, just beat third-quarter earnings and revenue estimates despite the impact of cocoa cost inflation. CEO Dirk Van de Put noted: “Although we anticipate challenging conditions to continue in some markets, we are encouraged by recent moderation in cocoa prices, as well as promising signs for a strong cocoa crop this fall.” (Source: Mondelez International Q3 2025 Earnings Release)

The company is on track to deliver 13.4% earnings growth and 8.2% revenue growth in Q4 2025, which includes the Halloween season (Exhibit 1).

Exhibit 1: Mondelez Revenue and Earnings Results/Estimates: 2019 – 2025

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Source: LSEG I/B/E/S data

However, analysts surveyed by LSEG remain cautious. Consensus Q4 EPS stands at $0.74, but a five-star rated analyst with a strong accuracy record has issued a Bold Estimate of $0.67, below the mean, suggesting a potential earnings miss and negative surprise.

The StarMine SmartEstimate is a weighted average of analyst estimates, with more weight given to more recent estimates and more accurate analysts. Our studies have shown that when the SmartEstimate differs from the consensus (I/B/E/S mean) by more than 2%, the company is likely to post subsequent earnings surprises directionally correct 70% of the time. This percentage difference is referred to as the Predicted Surprise (PS%) (Exhibit 2).

Exhibit 2: Mondelez International StarMine SmartEstimate and Predicted Surprise %: 2025

Source: LSEG Workspace

Hershey’s seasonal slowdown challenge

Meanwhile, Hershey announced in its latest earnings release that margins were pressured by higher input costs. CEO Kirk Tanner also cautioned that the Halloween shopping season has started slower than expected, citing unseasonably warm weather and delayed purchases as the holiday falls on a Friday.

Despite these headwinds, Hershey remains on track to deliver its third consecutive quarter of positive revenue growth, including Halloween-related sales in Q4 2025 (Exhibit 3). However, elevated input costs, softness in Mexico and weaker Halloween performance are expected to weigh on profitability, with earnings projected to decline 41.4% for the quarter.

Exhibit 3: Hershey Revenue and Earnings Results/Estimates: 2019 – 2025

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Source: LSEG I/B/E/S data

Hershey ranks in the top quartile across several StarMine models, including Earnings Quality, Smart Holdings, and Analyst Revisions. The company’s StarMine Earnings Quality Score stands at 76, indicating that reported earnings are derived from sustainable sources (Exhibit 4).

Additionally, Hershey scores an impressive 87 on the Analyst Revisions Model, which forecasts future estimate changes and price movements, suggesting analysts maintain a bullish outlook on the confectioner. The StarMine Smart Holdings Model further reinforces positive sentiment, reflecting strong buy-side interest in the stock.

Exhibit 4: Hershey’s StarMine Model Scores

Source: LSEG Workspace.

Tootsie Roll Industries

Tootsie Roll, a perennial Halloween favorite with over a century of history, continues to attract buy-side optimism. The StarMine Smart Holdings Model signals growing investor confidence, supported by strong fundamentals such as robust interest coverage and healthy return on assets (ROA) making the stock an appealing investment candidate. Year-to-date, Tootsie Roll shares have gained 11.28%.

Credit quality remains another bright spot. Tootsie Roll scores 84 out of 100 in the StarMine Credit Risk – SmartRatios Model, the most comprehensive credit risk framework in the StarMine suite (Exhibit 5). This model integrates insights from three proprietary approaches: Text Mining Credit Risk Model, Credit Risk – SmartRatios Model and Credit Risk – Structural Model, delivering a consolidated view of the company’s creditworthiness.

Exhibit 5: Tootsie Roll StarMine Model Scores

Source: LSEG Workspace.

Halloween discounts

In collaboration with Centric Market Intelligence, LSEG found that the discount penetration, the percentage of Halloween-related costumes and accessories on sale, has risen to 83%, up from 76% last year (Exhibit 6).

The average discount for these items is now 36%, marking the strongest level since pre-pandemic years. This indicates that retailers are offering more Halloween apparel at deeper discounts, betting that value-driven pricing will spur demand for costumes and accessories.

Exhibit 6: Avg. Discount and Discount Penetration for Halloween Costumes & Accessories

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Source: Centric Market Intelligence Co.

Despite these higher discounts, consumer demand for Halloween costumes remains muted compared to last year. As of October to date, only 2% of Halloween apparel online is completely sold out, below pandemic levels (6%) and pre-pandemic levels (3%) (Exhibit 7).

Exhibit 7: October Halloween Costumes Sold-Out Rates 2019 – 2025

Source: Centric Market Intelligence Co.

On the décor side, the discount penetration (the share of Halloween home decoration merchandise on sale) has climbed to 57%, up from 42% last year and the highest since its pre-pandemic level of 44% (Exhibit 8).

Average discounts remain in line with previous years, as retailers aim to protect margins amid inflationary pressures. For last-minute shoppers, this translates into a broader selection of merchandise on sale compared to previous years. However, average discount rates for home décor remain largely unchanged from prior Halloweens, indicating retailers are maintaining pricing discipline despite increased promotional activity.

Exhibit 8: Avg Discount & Discount Penetration for Halloween Home Decorations

Source: Centric Market Intelligence Co.

The fact that more than half of Halloween home décor items are on sale appears to be supporting demand. As of October to date, 21% of online Halloween décor is completely sold out, the highest level since 2019 (30%) (Exhibit 9). This trend may also reflect more conservative inventory planning by retailers amid ongoing trade volatility.

Exhibit 9: October Halloween Home Décor Sold-Out Rates 2019 – 2025

Source: Centric Market Intelligence Co.

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