Matte Recall: Financial Impact

Mattel said today that it expects the recall of popular toys like Dora, Elmo and Big Bird to cost the company about $30 million. Shares fell 8.7% during early electronic trading.

This staggering estimate of loss comes just one day after the world’s largest toymaker did a worldwide recall of 1.5 million toys that were manufactured in China for Fisher Price. It is estimated that 30% of the recalled items had reached store shelves worldwide. The items were recalled due to a discovery that the paint used contains a dangerous level of lead.

Lead paint has been linked to serious health problems that include brain damage. Mattel has notified the Securities and Exchange Commission that its results for the second quarter would be adjusted to account for the $30 million charge. Mattel reported revenue of $1.02 billion revenue for the 2nd quarter.

Mattel is also working on putting procedures in place that would ensure that painted toys from contracted manufacturers are safe before being distributed to the public.

Revenue source: www.shareholder.com/mattel