Toys 'R' Us commits to more safety checks

Toy retailer says it is now testing every product on its shelves following string of major recalls by Mattel, other toymakers.

By Parija B. Kavilanz, CNNMoney.com senior writer

NEW YORK (CNNMoney.com) -- Toys "R" Us on Monday said the company has initiated safety checks of all products on its shelves following the recent string of major toy recalls by Mattel and other toymakers.

Toys "R" Us spokeswoman Kathleen Waugh told CNNMoney.com that the new 'spot' checks of "thousands of toys" is already underway.

"Earlier this year we were already doing spot checks of toys because other retailers had recalled products that were made by the same manufacturer that also supplies to us," Waugh said.

"But after the recent recalls we decided to systematically recheck every product that is in our stores," she said.

Waugh said the company had hired Bureau Veritas Group, which is an independent organization that specializes in product inspection and testing, to conduct the product checks in its stores.

"If we find any unsafe product, we will immediately pull the products off the shelf, stop sales and notify the manufacturer and the appropriate authorities," she said.

Trouble in toyland

Given that the upcoming fourth quarter holiday season is crucial to toymakers and retailers, it's not surprising that Toys "R" Us and other merchants that sell toys are showing consumers that they are stepping up efforts to ensure that the products in their stores are safe.

Disney (Charts, Fortune 500), which typically licenses the use of its characters to toymakers, said Monday that the company will test more than 65,000 children's products, including items that are already on store shelves.

Disney plans to begin additional testing of toys, jewelry, baby bibs and furniture it sells in its stores for lead paint and any other safety issues.

Over 70 percent of toy shipments to retailers and two-thirds of all toy retail sales take place in November and December.

Therefore, any significant threats to toy sales, such as this year's big recalls by Mattel because of lead poisoning found in toys made in China, could have a damaging financial impact for both toymakers and retailers.

Jim Silver, a toy industry expert and editor-in-chief and co-publisher of Toy Wishes magazine said big recalls hurt manufacturers more directly .

"Retailers return the defective or unsafe toys to the toymaker who then has to bear the cost of the unsold goods," Silver said, adding that Mattel (Charts, Fortune 500) indicated that its recall of 1.5 million Fisher-Price toys in August would cost the company about $30 million.

In light of Mattel's big recalls, the No. 1 toymaker, reputed to have one of the highest safety standards in the industry, announced Monday that it has created a new "Corporate Responsibility" division that will report directly to CEO Robert Eckert.

Mattel said the division will include a "Product Integrity Policy & Audit" function, mandated to work as an internal audit organization that will monitor Mattel and vendor facilities' compliance with the toymaker's product standards.

"During our recent product recalls, we have taken a variety of prompt, corrective actions. We've strengthened our organization to maintain the place we have long held at the forefront of responsible corporate citizenship," Eckert said in a statement.

For retailers, recalls are not so much a money problem as it is a public relations issue, analysts said.

"Retailers can replace recalled products with other products within 48 hours," Silver said. "Ultimately, consumers will buy something if they are already in a toy store."

"I don't think the recalls per se are the only the only threat out there to toy sales this year," said Chris Byrne, an independent toy industry analyst, who added that retailers will continue to sell Chinese-made toys because most toys are manufactured there.

"We will see in the coming months whether or not consumers are feeling confident that enough testing has been done on toys sold in the U.S.," he said.

Toys "R" Us recalls crayon boxes for lead paint  Top of page

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.