Toymaker Mattel Inc. said Thursday that product recalls will wind up taking about $30 million from its second-quarter profits.
Mattel subsidiary Fisher-Price said it was recalling 967,000 toys — including the popular Big Bird, Elmo, Dora and Diego characters — because their paint contains excessive amounts of lead. The Fisher-Price recall involves 83 types of plastic preschool toys made by a Chinese vendor and sold in the United States between May and August.
"We apologize to everyone affected by this recall, especially those who bought the toys in question," Robert Eckert, Mattel Inc.'s chairman and CEO, said in a statement.
"Our goal is to correct this problem, improve our systems and maintain the trust of the families that have allowed us to be part of their lives by acting responsibly and quickly to address their concerns," he said.
The recall is the largest for Fisher-Price and parent company Mattel Inc. since 1998, when Fisher-Price had to yank about 10 million Power Wheels from toy stores.
Mattel said its second-quarter results, which it announced on July 16, will be adjusted for the cost of the recall. The toymaker originally posted net income of $43.1 million US, or 11 cents per share, compared with $37.4 million US, or 10 cents per share, a year earlier. Net sales totalled $1.02 billion, up from $957.7 million a year earlier.
In a filing Thursday with the U.S. Securities and Exchange Commission, Mattel said that while it was "not aware of any additional significant issues associated with lead in paints used on its products, there can be no assurance that additional issues will not be identified in the future."
The company said it has has launched an investigation and expanded its testing programs to ensure that painted goods finished at third-party contract manufacturers and at facilities operated by Mattel are systematically tested prior to being shipped to customers.
Mattel shares fell 40 cents to finish at $23.18 US on the NYSE.