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Thursday, August 2, 2007

Mattel Recall of Chinese Toys Will Cost $30 Million

Aug. 2 (Bloomberg) -- Mattel Inc., the world's largest toymaker, said a recall of 1.5 million Chinese-made products will reduce second-quarter operating income by almost 50 percent and that it will review the production methods of all its contractors in China.
The recall of toys, including Sesame Street dolls, that may contain excessive lead levels will cut $30 million from Mattel's previously reported operating income of $63.5 million. The company didn't say what the impact on net income would be.
The lead discovery might force Mattel to find new sources of low-cost goods and may further damage China's reputation as an exporter, following a recall of ``Thomas & Friends'' toys, a U.S. ban on Chinese toothpaste and scandals involving tainted cooking oil and diseased pork.
``Mattel has for many years been a leader in product safety,'' said Sean McGowan, an analyst at Wedbush Morgan Securities in New York. ``This serves as a reminder that even the most diligent companies are vulnerable to the materials that get supplied to their factories.''
Mattel stopped production and shipping of the affected toys and began an investigation around July 7, Walter said in an interview. Two-thirds of the affected toys never hit store shelves, according to company spokeswoman Lisa Marie Bongiovanni.
(Consumers wishing more information about the recall should contact Fisher-Price at +1-800-916-4498.)

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