Let's play a word association game. I'll say a word and you say the first thing you think of, okay?
First word: recall.
Now be honest- you thought about toymaker Mattel , didn't you? It's only natural, seeing as the company has been notorious for issuing massive recalls this year.
Next word: lead.
Let me guess... China? Of course it was! It's almost instinct to associate the 2, considering most of the high levels of lead found in recalled toys are made in China. Great job!
With our game concluded, most people obviously won't be surprised to learn that Mattel has issued yet another recall due to high levels of lead in toys made in China. This time, the toy manufacturer has recalled an additional 55,500 Go Diego Go toys from the U.S., Canada, England and Ireland.
Mattel has plagued soccer moms this year, recalling 844,000 toys in September and virtually 20 million toys in August. As a result, the company took a 0.9% hit in third quarter net profit.
Though company execs claim they've implemented a 3-point check system to test toys expected to ship for the holiday season, I wouldn't expect Mattel to have record-breaking sales. Being the parent of a toddler myself, the last thing I'll buy to stuff stockings this year is a box with the Mattel logo on it. After all, I'd probably end up having to take it back (if my daughter doesn't ingest lead first, that is).
Consumer and shareholder mentality seems to be the same, as Mattel plunged nearly 30% from April to early September. Just when investors began to forgive the company, regaining 12% from mid-September to October 1, the toymaker was back to its old tricks. In just 25 days, Mattel shares have dropped 3.3 points to teeter just above a new annual low, 18.6% below its 20-day moving average.
MAT is currently down 0.77% at $20.75.