Thread: Recalls Push Down Mattel Profit in Quarter

October 15, 2007
Recalls Push Down Mattel Profit in Quarter
By LOUISE STORY
Mattel, which has been scrambling to re-test the safety of millions of toys made in China, said this morning that delays in shipments of Barbie dolls, Hot Wheels cars and other popular toys had led to a decline in third-quarter earnings.

The extra testing — plus the temporary loss of export licenses for some of Mattel’s Chinese vendors — forced delays of toy deliveries by up to two weeks, which meant that some customer orders could not be fulfilled. Mattel said the problems had translated to a loss of $30 million to $50 million in sales that it would have otherwise made during the quarter. Mattel’s profit for the quarter, which ended Sept. 30, declined 1 percent, to $236.8 million.

The news sent Mattel’s stock down 1 percent, closing at $22.22.

The summer of recalls has tallied up to a large burden for Mattel, the world’s largest toy maker and the one most closely associated with the recent recalls of Chinese-made products. In August and September, Mattel recalled 21 million toys either because they were tainted with lead paint or because they contained small magnets that could be ingested by children.

With the all-important holiday sales season arriving, Mattel executives said they would introduce a new advertising campaign for the Polly Pocket line as well as a campaign for a new TMX Elmo toy that is scheduled to reach stores in November.

Mattel is acutely aware of its Polly problem. The company surveyed consumers after the recalls to find out if any of its brands had been harmed, and found that the Polly Pocket line had been the most scarred in consumers’ minds. Polly Pocket toys were among the 18 million that were recalled because they had small magnets attached that could be pulled off and swallowed, causing major digestive injuries. Those toys, though manufactured in China, were recalled because of a design flaw by Mattel rather than a mistake by a Chinese vendor.

Mattel is hoping to brighten Polly’s image with an advertising campaign starting this week called “The Polly Promise.â€

I will no longer buy Mattel... my grand babies will get American made only

Really, I feel so bad for MAttel, NOT. Do business with a Communist Country and they wonder why they poison us?