Cash-Strapped EToys Cuts Remaining Staff
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.
“The distribution centers have been well-staffed in order to keep up with the orders,” said EToys spokesman Gary Gerdemann. “At headquarters, we’re down to an essential crew of technical folks, Web site maintenance folks and a few of the financial and accounting folks.”
So far, the Santa Monica-based toy seller’s site is still up and running, even as the company winds down operations and continues working with investment group Goldman, Sachs & Co to find a buyer or investor, Gerdemann said.
In January EToys gave notice to 70% of its employees that their jobs would end sometime before March 31.
On Monday, the company also said a committee of its unsecured creditors has extended until Feb. 15 a previously announced grace period for collection actions.
During the holidays, EToys surprised investors and retail industry watchers with the news that its sales could be as much as $130 million below forecasts.
Although the company had originally predicted sales of between $210 million to $240 million, EToys reported last month that sales for the quarter came in at $131.2 million.
Many on Wall Street questioned the company’s money-losing business model, with naysayers predicting the company would implode as a result of high costs.
But in nearly every scenario, sales were expected to continue rising along with the number of new Internet users.
EToys said it was bogged down by a weak selling environment during the holidays, its most crucial sales period.
EToys also confirmed that it probably will be delisted by Nasdaq for failing to maintain a $1-per-share price for more than 30 consecutive days.
The Nasdaq warning could be moot because EToys will have funding only through the end of March and the standard 90-day compliance period ends May 2.
On Monday EToys closed down 3 cents to 28 cents a share. After going public in the summer of 1999, EToys shares rose to near $90, giving the company a market value of more than $1.5 billion. Its current market capitalization is $54.3 million.
