Disney to Implement Toy Double-Checks - NY Times

Entertainment giant Walt Disney Co. said it will begin testing its toys, including random tests of toys already on store shelves, for unsafe levels of lead paint, The New York Times reported Monday. The move follows three major toy recalls by Mattel Inc., and represents an important shift in the industry. Previously, licensors like Disney relied on manufacturers for testing and quality control. "It sends the message that we are looking over their shoulders," said Andy Mooney, chairman of Disney’s consumer products division, said. The company will test not only for possible lead contamination, but to determine whether small parts fall off, for example. Separately, toy-store giant Toys 'R' Us said it will conduct random checks at its stores by having branded toys tested at independent labs, the Times reported. If toy sales drop significantly over safety concerns, the toymakers, who normally guarantee a minimum in royalty payments to licensors, could take a hit. While the new tests might result in some redundancies, with the holidays around the corner, "anything that is going to restore consumer trust has got to be a good thing," Wedbush Morgan toy industry analyst Sean McGowan said. Mattel shares have lost 17% over the past two months.

Sources: New York Times, Wall Street Journal, MarketWatch
Commentary: Is the Recall Frenzy Affecting Toy Stocks? • Mattel Could Be Hit With Lawsuits on Recalls
Stocks/ETFs to watch: DIS, MAT. Competitors: HAS, RUS

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