CEO of FAO Schwarz on How Business Is Being Affected by More Recalls of Products From China

This is a rush transcript from "Your World with Neil Cavuto," September 5, 2007. This copy may not be in its final form and may be updated.

NEIL CAVUTO, HOST: In the meantime, another News Alert: more tainted toys being pulled from store shelves across America today. And, once again, they are made in China. It is Mattel's third recall this summer. And, this time, it involves one of its hottest brands, Barbie; 675,000 Barbie accessories, not the dolls themselves, the accessories, are among the recall items.

Now, my next guest is taking immediate action. On the phone with us is Ed Schmults. He's the CEO of FAO Schwarz.

Ed, good to have you.

ED SCHMULTS, CEO, FAO SCHWARZ INC.: Hi, Neil. Thanks for having me.

CAVUTO: What are you doing on this?

SCHMULTS: Well, we're doing a lot of things.

We're — first of all, we have come out with a — a toy buying guide for concerned parents. I am a concerned parent. I'm a father of a 2-and-a-half-year-old. And we thought parents would want to hear from — from us. We have got a long history of focusing on quality and service. And, so, it seemed like a natural thing to do to calm people down and try to help them through the — the concerns and what seems to be a constant array of recalls to help people get ready for the holiday season.

CAVUTO: How confident are you that the toys that are left on your shelves are safe?

SCHMULTS: Well, we — have not been hit too hard by these recalls. As I said, we focus on quality and tend not to have products that might be in mass retailers. And...


CAVUTO: But, you guys, don't you have that big Barbie tank, with all her shoes and all that stuff?

SCHMULTS: We have got some of the collector Barbies. But...


CAVUTO: So, are any of them are in danger, Ed?





So, some of the other stuff that might come out there, I think, with the China situation, as one young parent told me, it is something new every day. So, without any of your own knowledge, something new develops, and China admits, hey, you know, this, too is a problem.

SCHMULTS: Yes, it certainly seems that way.

We have — we have really, in the last year, been building up our own private label business, focusing on environmentally sensitive toys made from sustainably harvested raw materials using nontoxic water-based paints.

Some of these are made in China. And we believe that these are very safe. We really focus on durable toys, toys that — that don't have things that can break, that tend to be well made.

And I think one — one of the things we talk about in our toy buying guide for parents is really to focus on the durability of an item. Things that might be made of wood, I think, have a — will make parents more comfortable that, because it is a natural material, as long as the — the paints are OK, that it will come out to be a safe toy for their children.

CAVUTO: All right. Best of luck to you. Thanks for the reminders.

Ed Schmults of FAO Schwarz, thank you very much.

SCHMULTS: Thank you.

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