Amid its voluntary recall of 4.7 million Rock 'n Play sleepers after more than 30 babies died using them and pending class-action lawsuits, Mattel CEO Ynon Kreiz said the company is "confident about the trust consumers have in the brand."
»RELATED: Fisher-Price recalls Rock 'n Play Sleepers after dozens of fatalities
On Thursday, the El Segundo, California, company reported a loss of $183.7 million in its first quarter, which officials said in a call with analysts was better than expected because of demand for Barbie dolls and toys from Jurassic World and Toy Story. The 2018 loss of Toys R Us continues to impact the toy company.
The Rock 'n Play, which was voluntarily recalled April 12, came up several times during Thursday's call.
"Mattel has always held the safety of children as its highest priority and we take this matter very seriously," Kreiz said. "Fisher-Price has a long, proud heritage of prioritizing safety as its mission and we'll certainly continue that tradition."
Joseph Euteneuer, Mattel's chief financial officer, said the recall cost an estimated $27 million in the quarter, which includes the "negative impact of cost of sales of $22 million based on the impairment of our own inventory, an estimated consumer return rate and a $5 million net sale reduction related to returns from retailers."
Mattel expects to lose an estimated $30 million to $35 million in lost sales of the popular baby product, Euteneuer said.
"Separate from the loss of future Rock 'n Play sales, there may be additional recall related expenses in the year, but we do not expect them to be material," Euteneuer said.
Officials said they couldn't comment on the pending litigation. Last week, two class action suits were filed.
On Monday, analysts with UBS Investment Bank estimated the recall could cost Mattel up to $60 million with the reimbursements to consumers.
"Our analysis does not include financial impact that could result from 1) potential litigation costs; 2) any government fees or fines related to product safety; 3) and, more importantly, further brand reputational risk impacting demand if there is a wave of consumer product safety concerns as it relates to Fisher-Price baby gear," UBS said in a statement.
Consumers who have owned the Rock 'n Play six months of less will receive a full cash refund for the suggested retail price. Consumers who have owned the product longer "will receive a voucher to redeem for a new Fisher-Price product commensurate with the amount of time you have owned the Fisher-Price Rock 'N Play Sleeper," the company's recall notice states.
For more information, contact Fisher-Price online at www.service.mattel.com and click on "Recalls & Safety Alerts" or call 866-812-6518 9 a.m. to 6 p.m. EDT Monday through Friday.
Consumers can learn about reporting potentially dangerous products at www.consumersafety.org and www.saferproducts.gov.
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