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eToys Shutting Down UK Operation

Vastly troubled pure play Internet retailer eToys is shutting down its UK-based European operation, effective Jan. 19.

A notice on the European site says: "Can we fix it? No we can't! Sadly, eToys packs up its toy chest on January 19th, but to thank you ... we're offering 50% off the original price of all stock!"

"eToys.co.uk has performed really well, quickly becoming the number one retailer of children's products in the UK," the company said in a notice on the Web site. "But unfortunately, the disappointing recent performance of the company as a whole and the negative capital market conditions have forced us to close down."

eToys Europe is a wholly owned subsidiary of eToys Inc.

"Over the past 15 months, we have served thousands of customers exceptionally well, become the market leader, and made much progress across key performance metrics for the business," eToys International Vice President Ruben Rodriguez was quoted as saying by Reuters. "But current market conditions have left us no other options."

Echoing that thought, James Bidwell, marketing director for eToys in Europe, told InternetNews.com that although the European operation had been doing well, "the UK market is small compared to the big picture."

In fact, the company's stock has been trading in the 20-cent range, and its 52-week low is three cents a share. Ironically, eToys was rated the second most popular shopping site in visitors for the holiday season with 21 million shopping visitors, according to Web measurement firm NetRatings. Only Amazon.com exceeded eToys.

Weaker-than-expected results for the holiday season, dwindling cash levels and analyst downgrades ganged up on eToys in December, sending the online toy retailer's stock plunging.

Goldman Sachs, which had been hired by eToys to explore merger and acquisition opportunities, downgraded the stock at the time. The UK site closing will cost the jobs of about 75 staff members employed in Europe.