Magnetix accounts for 15 per cent of corporate sales. Mega Brands reported previously that a US$35.2-million charge related to the Magnetix recall resulted in a first-quarter loss of US$23.9 million.Ĭompany officials described the charge as a "worst-case scenario" and said no additional charges are expected.Īs news of Magnetix's woes fade and the company's other business grows, nervous investors will regain their support of the company, Bertrand said. The fourth isn't expected to result in a material financial charge. The company faces four outstanding lawsuits, three of which are covered by outside insurance, Bertrand told shareholders. "We continue to be concerned with the negative publicity surrounding this product and the potential impact this could have on shelf space," Anthony Zicha of Scotia Capital wrote in a recent report. While some retailers have resumed selling the Magnetix line, the process of sorting through millions of packages removed from shelves around the world will be completed within a month, Bertrand said.ĭespite company claims of retail support, several analysts have raised concerns about the lasting impact of the recall. The product has been redesigned to ensure the magnets don't pop out of their plastic casings. Only Magnetix sets with an ingestion warning on the package will be returned to the market for sale to consumers. Last month's recall followed reports that older products included in the previous recall were being sold alongside a new and safer design. We've had no incidents in our over 20 years' history of manufacturing product, so we took this very seriously." "We've taken actions every step of the way to make sure this product is safe to consumers. Mega Brands conducted two global recalls, the second prompted by confusion about the safety of the building sets, which have been blamed for the death of one child and injuries to several others who swallowed its powerful magnets. "The Magnetix recalls we've had have obviously not been good for the company from a financial standpoint but we think we've done the right things to protect that brand long-term and to make sure that the Magnetix brand is healthy long-term as well."īut Bertrand told shareholders that management took decisive action to put the issue behind it. "We didn't necessarily think it would play out this way," company president Marc Bertrand conceded Thursday following the company's annual meeting. Little could they or management forecast the roller coaster ride they would face as the company's finances and reputation were hit by recalls of its popular Magnetix product line. (TSX: MB) were feted with promises of good times that lay in store. MONTREAL – During the euphoria of last year's name change, shareholders of Mega Brands Inc.
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