• by Tanya Gazdik , November 6, 2007

Despite massive recalls tainting its holiday sales season, Mattel Inc. is forging ahead with new advertising for one of its top-selling items.

Mattel's Fisher-Price division recently broke TV advertising for the Smart Cycle, a physical learning arcade system. The Smart Cycle stationary bike connects to a TV and supports video game cartridges that are sold extra. East Aurora, N.Y.-based Fisher-Price recommends the video game bike for kids ages 36 months to 6 years.

The TV spot shows how the toy guides the rider through scenes like Math Mountain, Letter Creek and Shape Lake. Included is the tagline: "Get up. Get smart. Get going! Pedal to learn with the Smart Cycle. From Fisher-Price." There is a dedicated Web site for the product at http://www.fisher-price.com/fp.aspx?st=10&e=smartcyclelanding.

Since August, Mattel has announced four separate recalls totaling more than 20 million toys made in China because of dangers to children from lead paint or from tiny magnets that can be harmful if swallowed. The majority of the toys were recalled because they featured the small magnets.

El Segundo, Calif.-based Mattel's third-quarter profit slipped only 1%, but the company is warning of a slower-than-usual holiday quarter because of the recalls.

Worldwide sales generated by Fisher-Price brands were one of the company's stronger segments during the quarter, posting a 1% rise in gross sales for its parent company to $799.8 million. The world's biggest toymaker said net income for the quarter ended Sept. 30 fell to $236.8 million, from $239 million in the same period a year ago. Results included charges of about $40 million related to recalls covering merchandise that contained small magnets or was tainted with lead paint.

"Overall, it looks like--from a consumer standpoint--I think the anxiety about the recalls is largely behind us," Robert A. Eckert, Mattel chairman and CEO told analysts during a recent conference call, citing consumer surveys by the company.

Mattel plans to spend more money on advertising to help lure consumers back this holiday season, he said. Mattel is focusing on quality control and safety measures, including increasing random inspections of vendors. The company said it is testing every production run of completed toys for lead paint before the items are sent to stores.

Eckert told analysts that Mattel also would be testing television marketing for the American Girls brand on a regional basis during the pre-holiday selling season.