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Recall takes toll on RC2′s second quarter results

Toyco RC2 Corp has taken a good sock to the bottom line after a tumultuous quarter marred by a large product recall. Income from continuing operations for the Oak Brook, Illinois-based company dropped to US$2.4 million from US$8 million in the same quarter last year. And for the six months that ended June 30, 2007, earnings went from US$15.6 million to US$10.4 million this year.
August 2, 2007

Toyco RC2 Corp has taken a good sock to the bottom line after a tumultuous quarter marred by a large product recall. Income from continuing operations for the Oak Brook, Illinois-based company dropped to US$2.4 million from US$8 million in the same quarter last year. And for the six months that ended June 30, 2007, earnings went from US$15.6 million to US$10.4 million this year.

Net sales didn’t plummet nearly as much, and were down 14% to US$82.2 million. Decreases in preschool, young children and adult product sales were partially offset by a jump in the infant and toddler category.

Sales in the preschool category dropped by 27%, which RC2 attributes primarily to slower movement of its Bob the Builder and Thomas & Friends toy lines and ride-on vehicles. Of course, the preschool category also suffered a major blow from the Thomas & Friends product recall issued in June that cost the company an estimated US$3.3 million.

On the bright side, sales of infant and toddler products were up approximately 4%, driven by the Soothie bottle feeding system, American Red Cross health and wellness products marketed under The First Years brand, and newly relaunched Lamaze infant development products.

About The Author
Gary Rusak is a freelance writer based in Toronto. He has covered the kids entertainment industry for the last decade with a special interest in licensing, retail and consumer products. You can reach him at garyrusak@gmail.com

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