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Wednesday, 7 March, 2001, 21:20 GMT
eToys shuts up shop
A person sat by a computer
eToys's back was broken by mounting debts.
The online toy store eToys is history.

The internet retail pioneer's life came to an end on Wednesday, its back broken by debts worth at least $274m.

eToys milestones
Launched in 1997
Floated in 1999
Stock hits high in Oct 1999
UK site closes 3 Jan 2001
700 employees laid off 25 Jan 2001
293 employees laid off 5 Feb 2001
eToys filed for bankruptcy 26 Feb 2001
US site closed 7 March 2001
All the staff of the California-based company had already been laid off and its European operations had been axed.

The familiar tale of online euphoria and a buoyant flotation turned to ashes when eToys ran out of cash.

"The entire management team put their hearts and souls into this," said Ken Ross, eToys' spokesman when the company's bankruptcy was announced last month.

"While we're disappointed, we're very proud of the many great things we've achieved."

Worthless stock

eToys stock had been almost worthless for a while when the Nasdaq stock market delisted the company's shares last month.

Ahead of the delisting, the stock traded at a measly 9 cents per share.

At the time of the company's float in May 1999, its stock had quadrupled in price and hit a high of $85.35 in October 1999.

eToys first warned at the beginning of February that it might not meet Nasdaq's minimum requirements to keep its stock listed.

At the same time, the company said that its quest to find an investor to inject further capital was unlikely to succeed.

It had already warned in January that it only had enough cash to last until the end of March.

No employees

The company continued to work with its adviser, Goldman Sachs, on exploring strategic alternatives, such as a merger, asset sale or restructuring.

However, the writing was on the wall for the e-tailer, particularly as it had laid off the remaining 293 employees that worked for the company in early February.

"Certainly the climate we faced remained extremely harsh, and in this climate a buyer did not emerge," said Mr Ross on Monday.

About 700 employees had already been made redundant in January.

Closing the UK site

The redundancies followed the news that eToys was to pull the plug on its European site, based in the UK.

The UK site's sales in the run up to Christmas 2000 were twice those in the same period a year ago, but still below forecasts.

eToys did not fare much better in the US, where poor holiday sales hit its third-quarter results.

The company had a net loss of $85.8m in the third quarter, compared with a loss of $75.5m in the same quarter of 1999.

Launched in 1997

eToys was launched in 1997 by the internet incubator Idealab, as entrepreneurs competed to apply the model to other industries.

After initial glitches, it built up a good reputation for customer service - even building a state-of-the-art warehouse.

Although it was one of the most popular sites over the holiday period, its sales were not enough to cover its debts.

Despite its first-mover advantage on the internet and investment in customer service, it miscalculated the costs of running a retail business and suffered as giant High Street rival Toys R Us teamed up with Amazon.

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See also:

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More troubles for eToys
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eToys pulls out of Europe
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The joys of toys online
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06 Feb 01 | Business
Bank warns against Amazon bonds
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LetsBuyIt clinches rescue deal
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