Etoys Inc

Internet seller EToys Inc. began dismantling its once highflying operation Thursday, announcing 700 layoffs from its 1,000-person staff and closure of two warehouses. EToys was once considered a model for the future of Web retailing. Its apparent end as an independent company is the most dramatic example to date of how far online-only ventures have fallen.

Goldman Sachs Group Inc. on Tuesday won the dismissal of some claims in a lawsuit over accusations that it underpriced an initial public offering for Santa Monica-based EToys Inc. in 1999. The New York State Court of Appeals dismissed three claims in the case that had been reinstated by a lower appeals court. But the court did allow EToys' creditors to proceed to trial on a claim that Goldman Sachs breached its fiduciary duty to the company.

Scholastic Corp., publisher of the Harry Potter series of children's books, said it decided against buying the inventory of bankrupt EToys Inc. New York-based Scholastic had said it won an auction for the Santa Monica Internet retailer's inventory with an offer of 30 cents on the dollar, or about $8 million. The news sent Scholastic's shares plunging $5.19, or 13%, to close at $35.13 on Nasdaq.

KB Toys Inc., a U.S. toy store chain, agreed to pay about $5.4 million for the inventory of bankrupt Web retailer EToys Inc. Closely held KB Toys won bidding for seven of 11 lots of inventory and will sell the items at a discount on KBkids.com and at KB Toy Outlet and KB Toy Works stores, a spokesman said. The Pittsfield, Mass.-based company is interested in other assets, including EToys' Web address, he said.

EToys Inc. will close its Web site in Britain on Jan. 19 as it tries to reduce losses, according to the Internet toy retailer's Web site. The company is cutting prices by half for all merchandise, the site said. Officials at EToys were not immediately available for comment on how many people would be fired or whether the company's other site in Britain, Baby Centre, also would close. Shares of Santa Monica-based EToys closed unchanged at 22 cents on Nasdaq.

EToys Inc. will begin selling toys online to customers in Britain this fall, marking the Santa Monica company's first foray outside the U.S. EToys said it will establish a warehouse facility in the British town of Swindon for shipping toys, books, video games and other children's products. The facility will also serve as a beachhead for expanding across Europe. "International expansion is a cornerstone of our growth strategy," said Chief Executive Toby Lenk.

EToys Inc., which already has begun closing its European operations and laying off 70% of its domestic staff, said it has stopped shipping merchandise to Canada. The Los Angeles-based online toy retailer, which is searching for an investor or buyer, said notification of the change was scheduled to be posted on its Web site Wednesday night. EToys does not break out Canadian sales, but a spokesman characterized that portion of the business as "very insignificant."

A highly anticipated first-time stock offering from EToys Inc., the Santa Monica-based online toy seller, is expected to be delayed after the company announced Monday it has agreed to merge with BabyCenter Inc., a San Francisco online firm. Terms of the stock-swap deal were not disclosed. The deal is expected to be completed by July, EToys said. Afterward, BabyCenter shareholders would own about 15% of the combined company.

EToys Inc. warned that its fiscal third-quarter sales would fall short of expectations due to weaker-than-expected holiday buying and said it was exploring a merger, asset sale or other restructuring. The company, which said it plans to announce layoffs in January, has hired investment banking firm Goldman Sachs to find a way to keep its doors open. It now has enough money to continue operations through the end of March.

Scholastic Corp., publisher of the Harry Potter series of children's books, said it decided against buying the inventory of bankrupt EToys Inc. New York-based Scholastic had said it won an auction for the Santa Monica Internet retailer's inventory with an offer of 30 cents on the dollar, or about $8 million. The news sent Scholastic's shares plunging $5.19, or 13%, to close at $35.13 on Nasdaq.

EToys Inc., one of the Internet's flagship companies, filed for bankruptcy protection Wednesday, becoming the biggest online company yet to fail amid the devastating dot-com shakeout. More than the demise of a single company, the collapse of EToys shows just how far Bill Gross and his Pasadena-based Idealab Inc. have fallen. Besides EToys, Idealab churned out early Internet hits such as Web search engine GoTo.

Online retailer EToys said Monday that it will file for bankruptcy and advised shareholders its stock is "worthless." The once-promising toy seller had said this month that it was laying off all its employees after disappointing holiday sales crippled its operations. On Monday, EToys said it would shutter its Web site around March 8 and that it would file for protection from creditors under Chapter 11 of the Bankruptcy Code within 10 days.

Internet toy retailer EToys Inc. cut its remaining 293 employees Monday, telling workers who weren't laid off last month that they would be needed only through April 6. The final blow affects workers at EToys' distribution centers in Ontario, Calif., and Blairs, Va., who had been told that the company would continue shipping goods as long as it could, though executives believed EToys' cash would last only through the end of March.

RemedyTemp Inc., a national temporary-staffing firm, said Wednesday it expects to take a charge of about $2 million for the last quarter because of unpaid invoices by the struggling online company EToys Inc. The one-time charge would represent nearly a third of RemedyTemp's expected pre-tax profit for its fiscal first quarter ended Dec. 31. And it reflects how the fallout of the dot-com industry has trickled down to suppliers and service providers like RemedyTemp, which is based in Aliso Viejo.

EToys Inc., which already has begun closing its European operations and laying off 70% of its domestic staff, said it has stopped shipping merchandise to Canada. The Los Angeles-based online toy retailer, which is searching for an investor or buyer, said notification of the change was scheduled to be posted on its Web site Wednesday night. EToys does not break out Canadian sales, but a spokesman characterized that portion of the business as "very insignificant."

KB Toys Inc., a U.S. toy store chain, agreed to pay about $5.4 million for the inventory of bankrupt Web retailer EToys Inc. Closely held KB Toys won bidding for seven of 11 lots of inventory and will sell the items at a discount on KBkids.com and at KB Toy Outlet and KB Toy Works stores, a spokesman said. The Pittsfield, Mass.-based company is interested in other assets, including EToys' Web address, he said.

EToys Inc. said that it will add party goods and hobby items to its Web site this year to increase sales. The Internet toy retailer, whose shares have dropped 92% from their high, also said its advertising expenses will decrease significantly as a percentage of sales this year. In the year ended March 31, EToys spent $56 million on advertising, or 37% of sales. The company said it will offer the new product categories before the holiday sales season.

Internet seller EToys Inc. began dismantling its once highflying operation Thursday, announcing 700 layoffs from its 1,000-person staff and closure of two warehouses. EToys was once considered a model for the future of Web retailing. Its apparent end as an independent company is the most dramatic example to date of how far online-only ventures have fallen.

EToys Inc. will close its Web site in Britain on Jan. 19 as it tries to reduce losses, according to the Internet toy retailer's Web site. The company is cutting prices by half for all merchandise, the site said. Officials at EToys were not immediately available for comment on how many people would be fired or whether the company's other site in Britain, Baby Centre, also would close. Shares of Santa Monica-based EToys closed unchanged at 22 cents on Nasdaq.