Toy Bear’s Maker Bullish Despite Returns by Buyers

Teddy Ruxpin, an electronic, story-telling bear with a cuddlesome smile, became the talk of the toy business late last year. Just released in the fall, it was the nation’s fourth-best-selling toy by December.

People still talk about Teddy Ruxpin. But now, attention in the industry is focused on whether an unusually large number of the toys is defective. And that has put Chatsworth-based Alchemy II, which designed the toy, and Worlds of Wonder, the Fremont company that makes it, on the defensive.

Worlds of Wonder officials say that 35,000 of the 1 million bears, which sold for $60 to $80 each, have been returned because they don’t work. They say their failure rate of 3.5% is far below the industry standard of nearly 10% for a new electronic toy.

“There’s a perceived defective problem based on rumors started by sales people who work for our competitors,” said Bob Goldberg, Worlds of Wonder’s executive vice president for marketing. “It’s simply not true.”

Nevertheless, Larry Larsen, an Alchemy II vice president, said the cassette unit that plays tapes of stories and controls the simultaneous movements of Teddy’s plastic lips, cheeks and jaws was not sturdy enough to withstand the rough play of some small children. Larsen said a stronger tape player has been placed in newer models.

Some industry experts maintain that Teddy Ruxpin’s failure rate is higher than its designers and manufacturers admit.

“It’s hard to get solid evidence this early,” said Richard Anguilla, editor of Toy & Hobby World, a New York-based trade magazine. “But some people in the industry are saying Teddy Ruxpin may be a disaster.”

Paul Valentine, a toy industry analyst for Standard & Poor’s, said simply: “They don’t work.” Valentine said he found the problem in an informal poll he conducted of about half a dozen major New York City-area retailers.

In interviews, many retailers said that they haven’t personally witnessed Teddy Ruxpin dolls being returned more often than other sophisticated electronic toys. They said that, if there is a problem, however, it stems from the young age of many of the children who have the dolls.

“You can’t expect a 2-year-old to put in batteries correctly or operate a cassette,” said Ian McDermott, senior buyer for F.A.O. Schwarz in New York. “Many of the toys are not defective at all,” McDermott said.

Merri San, assistant manager at Michals Toy & Hobbies in Panorama City, said her store has wound up repairing two of the eight Teddy Ruxpin dolls it sold.

“Little kids will watch the toy open and shut its eyes by itself,” she said. “Then the kids will stick their own fingers in the doll’s eyes, and try to move them themselves. That’s how these dolls break.”

Goldberg said customers with broken toys can exchange them for new ones at retail outlets. He said customers who would rather have their Teddy Ruxpins fixed can have the repairs done and the dolls returned within several days.

The repaired dolls come back wearing bracelets saying they were treated by Dr. Bearwell at Grundo General Hospital, a part of Teddy Ruxpin’s fantasy world.