Mattel recalls may help some toy makers

updated 7:43 p.m. ET Sept. 5, 2007

NEW YORK - Playthings made by brands like Playskool, Brio and GeoMag of Switzerland could get a boost in the fast-approaching holiday sales season because they haven't been caught up in high-profile recalls over lead paint, dangerous magnets or other safety concerns.

Parents, who may snub Fisher-Price toys, Barbie dollhouses and Mega Brands' Magnetix that have been the subject of recent recalls, will want alternatives for their children, experts say.

"Winners who could capture the movement toward safe and friendly toys will see stronger holiday sales," said Eric Johnson, professor of operations management at Dartmouth's Tuck School of Business.

Among the most vulnerable brands, Johnson believes, is Mattel's Fisher-Price, the iconic preschool label which had built a reputation among parents for its carefulness but has been swept up in two of Mattel's three high-profile recalls of toys made in China and tainted with lead paint. The latest was announced just Tuesday.

"I think direct competitors will benefit," added Johnson, citing names like Little Tikes and Playskool.

Consumers already are thinking about changing their holiday buying strategies.

"I would rather pay more for toys that are safe than less for toys that are not safe," said Yi Chen, a Chicago pathologist who has three daughters, ages 18, 4 and 1 month.

Chen said she doesn't plan to shop less, just more carefully, watching out for toys with paint and toys made of plastic. And she said she doesn't plan on buying anything from Fisher-Price and wishes products coming from overseas were better regulated.

"Especially the plastic toys for the little babies — they put them in their mouth," she said.

Steve Barnard of Indianapolis, who was shopping on Wednesday at a Toys "R" Us store, said he won't rule out brands that were subject to recalls but will look closely at labels when he shops for holiday presents for his sons, ages 6 and 9.

He said he'll look for toys made in the United States. He also may look for toys with no paint or consider wooden toys from Europe.

"There seems to be lower quality and higher safety concerns with products made in China," he said.

Mattel, the world's largest toy maker, is not the only company under scrutiny. RC2 Corp., which in June voluntarily recalled 1.5 million wooden railroad toys and parts from its Thomas & Friends Wooden Railway product line because of lead paint, could also be hurt as well this holiday season. Mega Brands, whose recall of its Magnetix toys was expanded in April because of dangerous tiny magnets, also has been dealt a blow.

It's a headache for manufacturers and retailers alike with the holidays just months away. More than 80 percent of toys sold in U.S. stores are made in China, which has been blamed for most of the safety problems that triggered the recalls.

Retailers placed the bulk of their orders months ago, and are scrambling now to make adjustments.

Wal-Mart Stores Inc., the world's largest toy seller, has given half its magnetic construction space to GeoMag of Switzerland, a blow for Magnetix, according to Gerrick Johnson, an analyst at BMO Capital Markets Corp.

FAO Schwarz, which carries RC2's Thomas & Friends product line, will be featuring an eco-friendly wooden train line under its own store label this holiday season.

Ed Schmults, chief executive of FAO Schwarz, said that the train line was conceived before all the major toy recalls, but the timing is "fantastic."

"This could do better than expected," said Schmults.

Toys "R" Us Inc., meanwhile, is looking at ways to expand its assortment of American-made toys and is increasing its assortment of eco-friendly products. Though most of its holiday orders are in place, it is expanding its offerings of European brands like Brio, known for wooden trains.

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