eToys confident despite losses

The company predicts profitability by 2002

Online retailer eToys has reported fourth quarter losses three times bigger than in 1999.

But the company, whose share price has fallen sharply in recent months, says it expects to be profitable by 2002.

The latest loss of $48.4m compares with $13.2m in the same quarter last year.

Sales were $23m, up from $6.1m, and the businesses added 226,000 new customers in the first three months of this year.

eToys said it had been spending on campaigns to attract shoppers and on opening distribution centres.

The company said it had about $140m in reserves, enough to keep its operations going into next year.

President and chief executive Toby Lenk was upbeat about the latest figures.

Loss of confidence

He said that once the company reached about $750m in annual sales the US operations would break even.

Sales for the fiscal year were $151m, five times the previous year's figure.

eToys floated in May last year at $20 a share. The price soared to $86, but has been badly hit in recent weeks by the loss of confidence in internet businesses which are not yet in profit.

Last week the shares reached a record low of $4.75.

eToys started trading in the UK in October.

Although it made a loss of $9.5m on sales of $2.5m, the company was encouraged by that performance and plans further expansion later this year.

However, hopes of rapid growth in the US market might be dampened by new research on internet shopping.

Sales of toys, clothing and consumer electronics cooled sharply in the first quarter of this year, according to Harris Interactive.

Toy sites saw the greatest drop in quarterly revenues, down more than 60% from $379m to $147m.