HOLIDAY SALES SHORTFALL LED TO OPERATIONS CRISIS
With everything riding on its holiday sales, eToys faced an operations crisis even before December 25 rolled around, when it reported that its holiday sales would be around $120 million to $130 million, well below the projected $210 million to $240 million. That meant the company would run out of operating cash three months sooner than expected and would have to raise new capital by March 31, 2001. Wall Street sent the company's stock below one dollar a share for the first time, giving eToys a market value of just $37 million. The biggest factor affecting eToys's holiday performance was the online joint venture between Amazon.com and Toys 'R' Us, which dominated holiday sales with 123 million visitors during the holiday season, compared with 21.12 million visits to eToys.
From there it was all downhill for eToys, which could not raise capital under those market conditions. In January it shuttered its European operations, and laid off 700 workers the United States, or 70 percent of its workforce. The company also quit delivering to Canada, closed its two distribution centers, and finally announced that it had sent layoff notices to its remaining 293 employees. The company planned to file for Chapter 11 bankruptcy protection and cease operations by April 2001.
FURTHER READING:
Brinsley, John. "eToys: Stock Went from Hot to Shot." Los Angeles Business Journal. April 10, 2000.
Enos, Lori. "eToys to File for Bankruptcy." E-Commerce Times. February 27, 2001. Available from www.ecommercetimes.com.
"eToy Story." Business Week. January 10, 2000.
"eToys Files for IPO." InformationWeek. February 22, 1999.
"The Fortune Indexes: Street Sweep." Fortune. April 17, 2000.
Gorchov, Jolie. "Pundits Point to eToys as Dot-Com Dud." Los Angeles Business Journal. April 24, 2000.
Guglielmo, Connie. "Medium of Exchange: E-Com in Toy-land." Inter@ctive Week. October 4, 1999.
——. "Medium of Exchange: Toy Story 2000." Inter@ctive Week. October 9, 2000.
Macaluso, Nora. "Amazon and Toys 'R' Us Take E-Holiday Prize." E-Commerce Times. January 2, 2001. Available from www.ecommercetimes.com.
——. "eToys Site Back in Business." E-Commerce Times. October 18, 2001. Available from www.ecommercetimes.com.
Mahoney, Michael, and Jon Weisman. "The Last Days of eToys." E-Commerce Times. March 7, 2001. Available from www.ecommercetimes.com.
Regan, Keith. "eToys Fires Staff, Sets April Shutdown." E-Commerce Times. February 6, 2001. Available from www.ecommercetimes.com.
"This Toy War Is No Game." Business Week. August 9, 1999.
Trager, Louis. "Toy Market's Batteries Die." Inter@ctive Week. June 26, 2000.
Walker, Leslie. "Market Punishes eToys for Losses." The Washington Post. January 28, 2000.
Weisman, Jon, and Elizabeth Blakey. "Embattled eToys Slashes 700 Jobs." E-Commerce Times. January 5, 2001. Available from www.ecommercetimes.com.
"With Early-Bird Web-Site and Portal Deals, Former Disney Executive Seeks to Preempt Toys 'R' Us." Inc. October 1998.
SEE ALSO: Amazon.com; Business-to-Consumer (B2C) E-Commerce
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