Mattel (MAT): Looking into the latest recall


For the second time in as many weeks, Mattel Inc. (NYSE: MAT) has issued a recall of Chinese-manufactured toys thanks to the use of lead paint. If ingested, lead paint can lead to illness or developmental problems. The latest recall impacts 7.3 million play sets, including Batman action figures and the latest, disturbingly large (at least, since my childhood) incarnation of Polly Pocket dolls. Additionally, 1.5 million die-cast metal cars are going to be pulled off the shelves.

According to a statement from Nancy A. Nord, acting chairman of the Consumer Product Safety Commission: "The scope of these recalls is intentionally large to prevent any injuries from occurring."

As BloggingStocks' Brent Archer noted earlier today, it is "hard to imagine this stock going up by too much over the next few months." With 80% of all toys sold worldwide made in China, one has to wonder if this is merely the latest in a line of recalls set to come down the pipeline, but one also has to wonder if further complications are already being factored into the shares.


One thing MAT currently has in its corner is its venerability. Today, the company took out full-page ads in The New York Times (NYSE: NYT) and other newspapers, calling itself "one of the most trusted names with parents" and pledging that it will be "working extremely hard to address your concerns and continue creating safe, entertaining toys for you and your children."

Time will tell if this public relations Hail-Mary will do any good. On a technical basis, Mattel is bouncing off its 80-week moving average, which has served as support for the past 13 months.

Beth Gaston Moon is an analyst at Schaeffer's Investment Research.

Click here for Mattel toy recall news

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Brian White: Recalled Mattel (MAT) toys found to have 180 times the lead limit
Peter Cohan: Is China hurting Disney's (DIS) reputation?
Sarah Gilbert: Mattel's third toy recall: Parents response ho-hum, could Barbie survive?
Zac Bissonnette: Toys 'R' Us joins the recall club -- and how you can capitalize
Michael Fowlkes: More children's products join the Chinese recall list
Michael Fowlkes: Chinese executive found hanged following Mattel (MAT) toy recalls
Hilary Kramer: Mattel, Inc. (MAT): Buy or sell after recall?
Tom Taulli: Mattel toy recall: Lessons for business owners

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