Opportunistic KB Buys eToys Inventory

A bankruptcy court judge has approved KB Toys’ bid to buy the remaining inventory of defunct e-tailer eToys for $5.4 million.

The privately held Pittsfield, Mass., retailer is also interested in eToys’ corporate name and Web address, though no agreement has been reached.

The merchandise consists of toys and games for children of all ages and will be sold at KB’s 1,300 stores and through its Web sites. It has a retail value of
approximately $40 million.

“Because of our size and distribution channels we’re always looking for opportunistic buys,” said KB spokesman John Reilly.

The move comes three weeks after privately held KB bolstered its online offerings with a new Web site, www.kbwholesale.com, which is aimed at bulk customers such as discount stores and schools.

The auction marks a last chapter in the eToys saga. Once a Wall Street darling with a $10 billion market value, the Santa Monica, Calif., company
was unable to control overhead and lost money at a rapid clip.

It first ran into trouble during the holiday sales season of 1999, when it failed to make many deliveries on time. Determined to do better in 2000, eToys poured
capital into a new warehouse facility and moved delivery in-house. But the bet never paid off and as sales faltered, the company spiraled.

Late last month, Scholastic, a New York children’s book publisher, withdrew an offer to buy eToys’ assets for $8 million after shareholders balked. Before going
under, eToys sold its BabyCenter Web site and related properties to Johnson & Johnson for $10 million cash.

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