Later on Wednesday CEO Robert Eckert of Mattel, the world’s largest toymaker, testified before a US congressional subcommittee on toy safety, and admitted that his company, plagued by the recall of millions of Chinese-made toys containing lead, could have done a better job ensuring product safety.
He didn’t exactly accept full responsibility (“We were let down, so we let you down,” Eckert said, referring no doubt to the Chinese manufacturers who didn’t comply to North American standards), but Mattel has pledged to ramp up testing of all its products, including testing of every production run of finished toys before they hit shelves.
Not surprisingly, Eckert’s pledges and quasi mea culpa didn’t impress everyone, but the Street was suitably moved enough to push Mattel’s stock (NYSE:MAT) up by about 5% on the day; since its low point two days ago, the stock is up about 10%.
Say what you will about Eckert’s phraseology, but in money terms that’s a pretty good apology.
Another thought: even when times are tough, doting parents will still scrape together enough cash to buy Little Johnny and Judy toys when Christmas rolls around. Why not? In the big scheme of things, toys (the leadless ones, mind you) are a relatively cheap way to bring lots of joy to tiny tots. The upshot: toy stocks tend to do well during recessions. If you think one is coming (see Sept. 7 post below), then there could be worse places to be.
No doubt some in the market see Mattel’s current troubles as a buying opportunity.