The company lost $9.6m in the period ended March 31st compared to a loss of $23.9m in the same period last year.
Net sales fell 12.2% to $79.1m compared with $90.1m in the previous first quarter.
Voluntary product recall and other charges amounted to $35.2m. It announced two new recalls in March after reports of magnets coming loose from several toys manufactured in China.
The firm says it has completed the integration of its North American distribution activities as well as other efficiency measures that should generate $12m in annualised savings starting toward the end of the second quarter.
It also confirmed that it is continuing to explore the sale of its RoseArt stationery and activities business, which had sales of more than $200m last year.