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TECHNOLOGY; EToys to Lay Off Its Remaining Workers
By MATT RICHTEL FEB. 6, 2001
EToys, the once highflying Internet toy retailer, said today that it would lay off its 293 remaining employees and shut its doors on April 6, barring an 11th-hour rescue in the form of a large investor or a strategic partner.
The company also said it was on the verge of being delisted from the Nasdaq stock exchange. The exchange sent a notice to eToys, threatening to remove the company by May 2 because it has failed to maintain at least a $1 share price for 30 consecutive days, according to Gary Gerdemann, spokesman for eToys.
The events were not a complete surprise, given that company executives had cautioned late last year that eToys had only enough cash to remain open through March. Still, the accelerated decline of eToys underscored how hard it has become to survive as an e-commerce company, despite a stock that once traded as high as $86 in 1999 and strong brand recognition. The stock closed today at 28.13 cents, down 3.12 cents.
In January, eToys took its first major steps toward closing, announcing layoffs of 700 of its 1,000 employees, the shutdown of its British operation, and the closing of two of its smaller warehouses.
The layoffs followed a holiday quarter in which eToys saw sales grow to $131 million. That was 23 percent higher than the same period a year ago, but far lower than the $210 to $240 million the company had initially predicted and had built itself up to accommodate. The company had an operating loss of $74.5 million for the quarter, or 52 cents a share.
Toby C. Lenk, the chief executive and president of eToys, said late last year that eToys's struggles were attributable to a generally tough retail environment and, specifically, slower than expected Internet retail sales. Neither he nor other eToys executives made themselves available for questions today.
Mr. Gerdemann, the spokesman, said the executives were continuing efforts to work with Goldman, Sachs to find new investors, a buyer or a viable restructuring plan for eToys. ''Hopes are still alive'' that the company can find an alternative to shutting down, he said, adding, ''We're business as usual on a reduced staff.''
Mr. Gerdemann said the employees who received notices that their jobs would be eliminated by April 6 work predominately in two distribution centers, in Ontario, Calif., and Blairs, Va.
A version of this article appears in print on February 6, 2001, on Page C00008 of the National edition with the headline: TECHNOLOGY; EToys to Lay Off Its Remaining Workers. Order Reprints| Today's Paper|Subscribe