How Are Toy Makers Doing Financially After Last Year’s Record Toy Recalls?

Mattel reported a loss for the fist quarter of 2008 due to lower sales of Fisher-Price, legal expenses and higher costs. They are expecting to increase toy prices this year to raise profits.

Hasbro reported a strong first quarter profit on sales of the Transformers , Littlest Pet Shop and Playskool toys.

RC2 plagued with recalls last year on its Thomas and Friends toys reported a lower than expected quarterly profit.

Jakks Pacific maker of Fly Wheels which were recalled last year also reported lower profits due to litigation and product testing costs.

Rising Toy Prices and the Cost to Parents of Recalled Toys

Toy makers expect toy prices to increase by 5 to 10% by the end of the year. This price increase is apparently not due to all of the toy recalls last year but due to higher wages in China, higher costs of raw materials (plastic has risen by 25% over the past two years due to higher gas prices), and a weaker dollar compared to the Chinese yuan which makes it more expensive to buy Chinese goods.

While we as parents are going to have to pay more for our children’s toys, I would like to point out a statistic that SmartToyChoice follows which is the estimated amount of money parents spend on toys that are recalled. For the 30 toy recalls so far in 2008, the retail value of the toys recalled is $74 million ($611 million in 2007).