Repercussion of recalls starting to show

When Mattel reported today, a one percent drop in fiscal third-quarter profit, the world's largest toy maker said it was a result of charges, costs and supply chain delays related to multiple product recalls, the AP reports. Mattel has had three recalls totaling 21 million toys since August as a result of either excessive amounts of lead paint or from tiny magnets that could be harmful if swallowed. Most of the toys recalled featured the small magnets. Last month, Mattel issued an apology to the Chinese government, saying the problem was a design flaw and not the fault of Chinese manufacturers.

"Despite the challenges the company faced during the third quarter, the business has performed fairly well, even with some supply chain disruptions that impacted our sales during the quarter," said Robert A. Eckert, chairman and chief executive. "U.S. Barbie performance was soft and remains an area of focus, although a good portion of the decline in the quarter was directly related to the supply chain disruptions."

The AP also reported that, during a conference call with Wall Street analysts, Eckert acknowledged retailers are anxious about the state of the economy and the impact the toy recalls may have on consumers as the crucial holiday season nears.

PRWeek covered Mattel's crisis communications efforts during its second and third recall, and Eckert's testimony before a Senate Appropriations subcommittee.