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!”

“ 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 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 exceeded eToys.

Weaker-than-expected results for the holiday season, dwindling cash levels
and analyst downgrades
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.

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