In a saga that has everything from toys with lead to the suicide of a manager who ran a factory that allegedly made some of the tainted toys, add yet another recall. Mattel (NYSE: MAT) has already recalled about one million toys, and, according to (subscription required) The Wall Street Journal, it is about to recall several hundred thousand more. The Journal writes:: "One of the recalled items is a die-cast car that may contain lead paint."
Mattel said it would take a $30 million charge for the first recall.
Lost in much of this is what will happen to Mattel's business. The recall costs may be modest compared to the company's $5.7 billion in annual revenue. But, it took two or three years for the big toy company to turn around after a sharp fall in sales of it Barbie line flat lined the stock from 2002 to 2005.
In July 2006, Mattel's stock traded for $16. Improved financial results from a stronger product line took the shares to almost $30 this April But, the stock has moved down to the low $20s. Watch it fall further if the China toy problem gets any worse.
Douglas A. McIntyre is a partner at 24/7 Wall St.
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Reader Comments (Page 1 of 1)
8-14-2007 @ 9:54AM
JEvans said...
Not surprised in the least. There will be more shoes to drop in the coming weeks and months, and not just from Mattel. These factories did work for other US firms as well.
And then there is the possibility of EU companies recalling stuff made in China. Oh no, this is going to be a big issue and as a parent, I am thrilled that these companies will take a PR hit. Still, they will stay in China with more assurances of "new" QA procedures blah blah blah.
By the way, you can tell that some PR agency advised Mattel to come out ahead of the story by leaking to the WSJ, just to soften the blow a bit. I see right through this crap. The whole thing stinks.
CHINA IS A THIRD WORLD COUNTRY WITH NO STANDARDS AKIN TO WESTERN STANDARDS (IT IS DIRTY)! When will someone have the nuts to say so? The Japanese know.
8-14-2007 @ 2:53PM
michael said...
Wall Mart has allowed CHINA to poision this country...remember LOW prices always low prices.....and killer results..lets stop this insanity....Wall Mart is killing us for LOW prices..what ever happened to Quality 1st!