Thomas Recall Costing RC2 Some Money

Being the true blogger that I am, I watch the stats on the site to see what is getting hits here.  Surprisingly, the bulk of my traffic is for the goofy Mike Rowe QVC videos.  Not as surprisingly, Thomas Recall is a close second.  A few folks have left comments wondering about the status of the metal “Take Along Thomas” toys. 

First off, I should say I’m nothing more than a concerned parent.  Around the time of the initial recall for the wooden trains, there was a lot of rumors swirling about the metal ones as well. A lot of this was fueled by reports in the Chicago Tribune that the Illinois State Attorney’s office was investigating these trains. There is also a pending class action suit. Beyond that, I’ve seen no other news on these toys.

One thing I did find interesting was RC2’s second quarter filing, specifically regarding the financial impact of the recall:

…due to the high levels of recovery and related toy replacement costs, the Company has recorded a charge of approximately $4 million, net of tax, in the second quarter. This charge is based on the latest estimates of retailer inventory returns and consumer product replacement costs…  In addition, the Company currently anticipates incremental professional service fees, air freight, returns and replacement processing, marketing and promotional costs related to the recall totaling between $3 million and $4 million, net of tax, in the second half of 2007. These charges include estimated defense costs relating to the class action lawsuits that have been filed against the Company.

Eight million dollars.  According to the report, they only had $2.4 million in the second quarter, down from $8 million for the prior year’s same period.  Revenue was also down 14% year-over-year. I’m glad I’m not a stock holder.

RC2 seems to have fallen out of the spotlight after Mattel’s lead paint recall (thankfully we had none of the affected toys.) The big difference I’ve noted is I’ve heard Mattel’s CEO on the radio at least twice making a statement and trying to calm fears, where I had to utilize some serious search engine kung-fu to see anything offical from RC2 or HIT Entertainment.

So to answer the question I’ve gotten several time, no, I know nothing more about the safety of the metal Take Along Thomas trains.  My suggestion would be to follow both the CPSC site and possibly news on RC2.  (Note: There have been more wooden trains and Thomas merchandise recalled this month due to lead paint. Neither are from RC2.)