Mega Brands sales weaken
Toy maker and art supply company Mega Brands Inc. said Tuesday that it lost $3.6 million US in the second quarter on falling revenues.
The Montreal-based company said revenue dipped 12.4 per cent year-over-year to $106.4 million on lower sales in its toy, stationery and activities product lines as well as additional product recall charges.
The company said its top line sales declined to $47.3 million compared to $57.9 million in the second quarter of 2007. The decrease in sales also reflects $2.5 million of additional product recall charges related to magnetic toys.
Mega Brands said that following the close of its second quarter, it has reached an agreement in principle with its insurers for the recovery of an additional $9.3 million related to the settlement of lawsuits for magnet ingestion. The company said it expects to receive payment shortly and to record this amount in its third quarter results.
The company had to recall some of its magnetic toys because of the risk children might swallow magnets.
"Looking ahead, the next two quarters are traditionally the strongest in our business and our objective is to restore profitability," stated Marc Bertrand, president and CEO of MEGA Brands.
"This year's new product launches are occurring in the third and fourth quarters and we are well positioned to build sales momentum through the balance of the year."
Shares of Mega Brands rose more than 10 per cent, rising 29 cents to $2.94 in morning trading on the TSX.
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