Spectre Brands

DeadOnline toy store · Santa Monica and Los Angeles, California

eToys

Website opened October 1997. Chapter 11 filed and site closed Mar 7, 2001.

For one day in May 1999 it was worth more than Toys “R” Us. It never once made money.

Why dead: The company closed its website on the day it filed for bankruptcy in March 2001 and was liquidated. The name passed to KB Toys and later to Toys “R” Us, which bought eToys.com in 2009, but etoys.com did not load when we tried it in October 2026.81114

eToys.com logo with a red e and blue Toys
An eToys.com logo, from Wikimedia Commons, where it is marked public domain. Commons gives no date, so we cannot say which owner used it.From Wikimedia Commons, where it is marked public domain.

eToys was incorporated as Toys.com in November 1996, backed by the incubator Idealab, and began selling toys online in October 1997. Its IPO in May 1999 priced at $20 and closed at $76.56, valuing the company at $7.78 billion. To win the 1999 holiday season it spent $55.5M on advertising, built warehouses across the country and lost $189.6M on $151.0M of sales. The next Christmas, sales came in at $131M against a forecast of $210M to $240M. It laid off most of its staff in January 2001 and filed for bankruptcy that March, owing about $274M. Its creditors later sued Goldman Sachs over the IPO price. This page is built from eToys’ SEC filings, the court record and contemporary press.

The company in four numbers

$7.78B
market value at the close of its first day of trading4
$151.0M
net sales in the year to March 31, 2000, its only full public year1
$189.6M
net loss in the same year1
$3.4M
roughly what KB Toys paid for the name and website in May 200111

Key findings

  1. Every sale cost more than it earned. In the year to March 2000 marketing and sales expenses were 79.8% of net sales, and gross profit only 19.2% (derived). Advertising alone was $55.5M, 37% of sales.1
  2. It built for a Christmas that did not come. It planned a 763,000-square-foot warehouse in Ontario, California and a 715,000-square-foot addition in Virginia.1 Holiday 2000 sales were $131.2M; it had forecast $210M to $240M.25
  3. It ran out of cash in a closed market. Cash fell from $139.6M in March 2000 to $62.8M by December. The company said it needed “an additional, substantial capital infusion,” blamed “the current disfavor of Internet retailing,” and filed for bankruptcy three months later.258
  4. The IPO was the high point. The shares closed at $76.56 on the first day, $25 at the end of 1999, and never again rose above the $20 offering price.413

Post-mortem No. 019 · Every figure links to a numbered source · Derived figures, estimates and unverified claims are labeled

The story

Toys.com to EBC I, Inc.

eToys lasted three and a half years as a store. Most of its money was spent in one of them.

Chapter 1 of 6

Oct 1997

the month eToys began selling on its website

Commercial · 1999eToys commercial, February 1999 A spot from three months before the IPO. The date is the uploader’s. Watch on YouTube

1996 – 1999 · The start-up

A toy store with no stores

The company was incorporated in Delaware as Toys.com in November 1996, became eToys.com Inc. in May 1997 and eToys Inc. that June. It began selling in October 1997.1 Its first backer was Idealab, the Pasadena incubator, which held about 18.3 million shares before the IPO.3 Its founder and chief executive, Toby Lenk, was a former Disney strategic-planning executive.4

In its first two years it sold about $30M of toys, games, software and music to 365,000 customers and lost $30.8M.4

Chapter 2 of 6

$76.56

the first day’s closing price, against $20 at the offering

Commercial · 1999eToys.com ad, 1999 From the year of the offering. The year is the uploader’s. Watch on YouTube

May 1999 · The offering

Worth more than Toys “R” Us

Goldman Sachs led the offering of 8,320,000 shares at $20, raising $166.4M before fees.3 On May 20, 1999 the first trade was at $78; the shares reached $85 and closed at $76.56, up 283%, valuing eToys at $7.78 billion, more than Toys “R” Us or Mattel.4 At the day’s high, Wired put its value at more than $8.5 billion.9 Lenk’s stake was worth $547M at the close; the company had 306 full-time employees.4

In 2005 New York’s highest court let eToys’ creditors pursue Goldman for breach of fiduciary duty, on allegations that it underpriced the shares to benefit clients who allegedly kicked back part of their trading profits. The allegations were not proven at that stage.13

Chapter 3 of 6

79.8%

of net sales spent on marketing and sales in the year to March 2000

Original illustration of a warehouse stacked with shipping boxes. The quantities are not real.

1999 – 2000 · The first holiday

$55.5M of advertising

With the IPO money and $150M of convertible notes, eToys bought BabyCenter, opened a British site and expanded its warehouses.1 In the year to March 31, 2000 net sales rose to $151.0M, but marketing and sales cost $120.5M, including $55.5M of advertising and $50.3M of fulfilment, customer service and card fees.1 Gross profit was $29.1M. The net loss was $189.6M.1

It had 1.9 million customers and 940 full-time employees.1 It ran five distribution centres, from Commerce, California to Swindon, England, and planned two more of more than 700,000 square feet each.1

Chapter 4 of 6

$131.2M

holiday-quarter sales, against a forecast of $210M to $240M

Commercial · 2000eToys “Where the Holidays Come to You” (2000) The holiday campaign of the quarter that missed its forecast by almost half.25 The year is the uploader’s. Watch on YouTube

Dec 2000 · The second holiday

Half the forecast

On December 15, 2000 eToys warned that holiday-quarter sales would be $120M to $130M, not $210M to $240M, and that cash would last only to about March 31, 2001.5 It blamed “a harsh retail climate,” “the current disfavor of Internet retailing,” and shoppers “meaningfully distracted by the presidential election.”5 The actual figure was $131.2M, up 23% on the year before; the quarter’s loss was $85.8M.2

On January 4, 2001 it gave notice to about 700 of its roughly 1,000 employees, closed two warehouses and shut its British site.6 Within weeks every remaining employee had a termination notice.2

Chapter 5 of 6

$274M

of liabilities at January 31, 2001

Retrospective · 2021The dotcom bubble and the rise and fall of eToys A retrospective discussion, embedded as commentary; no figure on this page is taken from it. The year is approximate, from the upload age YouTube shows. Watch on YouTube

Mar 2001 – 2002 · The end

Bankrupt, and the name sold for $3.4M

On March 7, 2001 eToys filed for Chapter 11 in Delaware, saying its liabilities of about $274.0M would “substantially exceed” anything a buyer would pay. It closed the website at the end of that day; Nasdaq delisted the shares the next morning.87

KB Toys bought most of the inventory for about $5.4M in April, and the name, website and software for nearly $3.4M in May.1011 The company became EBC I, Inc., and its liquidating plan took effect on November 5, 2002.12

Chapter 6 of 6

2009

the year Toys “R” Us bought eToys.com

2001 – today · The name

KB Toys, The Parent Company, Toys “R” Us

KB Toys sent eToys visitors to its own KBkids.com site.11 By 2008 eToys.com belonged to The Parent Company, which filed for bankruptcy that December; in February 2009 Toys “R” Us bought eToys.com, BabyUniverse.com and ePregnancy.com for an undisclosed price.14

When we tried etoys.com in October 2026 it did not respond. We could not establish who owns the name today.

Timeline

From Toys.com to Toys “R” Us

Incorporation to liquidation took six years; the store itself was open for three and a half. Filter by thread.

All 18 events as a list
  1. Nov1996
    Corporate

    Toys.com

    The company is incorporated in Delaware as Toys.com.1

  2. Jun1997
    Corporate

    eToys Inc.

    After a brief spell as eToys.com Inc., the company takes the name eToys Inc.; Idealab holds its founding shares.13

  3. Oct1997
    Store & warehouses

    Open for business

    eToys begins selling on its website.1

  4. 1999
    Money

    First full year

    In the year to March 1999: $30.0M of sales, a $28.6M net loss.1

  5. May 201999
    Money

    The IPO

    8.32 million shares at $20; first-day close $76.56; market value $7.78 billion.34

  6. Oct1999
    Store & warehouses

    Britain

    eToys.co.uk opens.1

  7. Dec 311999
    Money

    $25

    The shares end 1999 at $25.13

  8. 2000
    Money

    A $189.6M loss

    Year to March 2000: $151.0M of sales, $55.5M of advertising, 1.9 million customers.1

  9. Jun 122000
    Money

    Preferred stock

    eToys sells $100M of convertible preferred stock, which converts into ever more shares as the price falls.2

  10. Dec 152000
    Bankruptcy & after

    The warning

    Holiday sales will be $120M–$130M, not $210M–$240M; cash will last to about March 31.5

  11. Jan 42001
    Bankruptcy & after

    700 job notices

    About 700 of roughly 1,000 staff are given notice; two warehouses and the UK site close.6

  12. Mar 72001
    Bankruptcy & after

    Chapter 11

    eToys files in Delaware, owing about $274M, and closes its website that night.8

  13. Mar 82001
    Bankruptcy & after

    Delisted

    Nasdaq delists the shares.78

  14. Apr2001
    Bankruptcy & after

    Inventory sold

    KB Toys buys most of the stock for about $5.4M.10

  15. May2001
    Corporate

    The name sold

    KB Toys pays nearly $3.4M for the name, website and software.11

  16. Nov 52002
    Bankruptcy & after

    Liquidation plan

    The plan for EBC I, Inc., formerly eToys, takes effect; the companies are to be dissolved.12

  17. Jun 72005
    Bankruptcy & after

    Creditors v. Goldman

    New York’s Court of Appeals lets the fiduciary-duty claim over the IPO price go forward.13

  18. Feb2009
    Corporate

    Toys “R” Us

    Toys “R” Us buys eToys.com from the bankrupt Parent Company.14

The money

Sales grew five times. Losses grew seven.

eToys’ fiscal year ended March 31. Figures are from its SEC filings; it filed no annual report for the year to March 2001.

Net sales and net loss

$ millions. The last bar is nine months, to December 31, 2000.

Data table
Net sales and net loss (Sales vs loss)
PeriodNet sales ($M)Net loss ($M)
FY to Mar 1998$0.7M$-2.3M
FY to Mar 1999$30M$-28.6M
FY to Mar 2000$151M$-189.6M
9 mo. to Dec 2000$182M$-196.2M
Annual report for fiscal 20001 and quarterly report to December 31, 2000.2

Where the money went, year to March 2000

Every cost line against $151.0M of net sales. Total costs were $344.1M.

$344.1M Total costs
$122M 35%Cost of goods sold$120.5M 35%Marketing and sales (incl. $55.5M advertising)$43.4M 13%Web site and technology$27.8M 8%Goodwill amortization (BabyCenter)$16.7M 5%General and administrative$13.7M 4%Deferred compensation$122M 35%Cost of goods sold$120.5M 35%Marketing and sales (incl. $55.5Madvertising)$43.4M 13%Web site and technology$27.8M 8%Goodwill amortization (BabyCenter)$16.7M 5%General and administrative$13.7M 4%Deferred compensation
Data table
Where the money went, year to March 2000
Where it wentAmountShareNote
Cost of goods sold$122M35%
Marketing and sales (incl. $55.5M advertising)$120.5M35%
Web site and technology$43.4M13%
Goodwill amortization (BabyCenter)$27.8M8%
General and administrative$16.7M5%
Deferred compensation$13.7M4%
Annual report for fiscal 2000.1 Total costs are cost of sales plus operating expenses (derived).

The share price

Dollars per share at selected points.

$0.00$25.00$50.00$75.00$100.00IPO priceDay 1 closeQ1 FY00 highQ3 FY00 highDec 31 ’99Q4 FY00 low123$0.00$50.00$100.00IPO priceQ1 FY00 highQ4 FY00 low123
  1. Day 1 close · the debut Up 283% on the day.4
  2. Q3 FY00 high · the high $84.50 in the quarter to December 1999.1
  3. Q4 FY00 low · the slide A low of $8.84 in the quarter to March 2000.1
Data table
The share price
Not evenly spacedShare price
IPO price$20.00
Day 1 close$76.56
Q1 FY00 high$77.00
Q3 FY00 high$84.50
Dec 31 ’99$25.00
Q4 FY00 low$8.84
Prospectus3, Los Angeles Times4, quarterly high and low prices in the annual report1, and the court’s account of the year-end price.13

Holiday 2000: forecast and result

Net sales for the quarter to December 31, 2000, $ millions.

October forecast, top
$240M
October forecast, bottom
$210M
Actual
$131.2M
Same quarter, 1999
$106.8M
Data table
Holiday 2000: forecast and result
FigureNet salesNote
October forecast, top$240M
October forecast, bottom$210M
Actual$131.2M
Same quarter, 1999$106.8M
December 15, 2000 press release5 and the quarterly report.2

The last nine months

$139.6M → $62.8M
cash, March 31 to December 31, 200012
3.4M
cumulative customer accounts by December 20002
$196.2M
net loss in the nine months to December 31, 20002
$416.6M
total net losses from the start to December 2000 (derived)12
SEC filings.12

Part 3 of 6

Brand

Commercials & footage · Brand gallery

Commercials & footage

Where the holidays come to you

eToys spent $55.5M on advertising in its first public year.1 These are its television spots as uploaded by collectors of old broadcasts, and one retrospective. Air dates come from the uploaders unless a caption says otherwise.

Commercial · 1999eToys commercial, February 1999 A spot from three months before the IPO. The date is the uploader’s. Watch on YouTube
Commercial · 1999eToys.com ad, 1999 From the year of the offering. The year is the uploader’s. Watch on YouTube
Commercial · 2000eToys Summer Shop (recorded May 25, 2000) A summer promotion; the recording date is the uploader’s. Watch on YouTube
Commercial · 2000eToys.com commercial (recorded Nov 5, 2000) From the start of the last holiday season, six weeks before the profit warning.5 The recording date is the uploader’s. Watch on YouTube
Commercial · 2000eToys “Where the Holidays Come to You” (2000) The holiday campaign of the quarter that missed its forecast by almost half.25 The year is the uploader’s. Watch on YouTube
Retrospective · 2021The dotcom bubble and the rise and fall of eToys A retrospective discussion, embedded as commentary; no figure on this page is taken from it. The year is approximate, from the upload age YouTube shows. Watch on YouTube

Videos are embedded from the services that host them and load only when you press play. YouTube embeds use youtube-nocookie.com. Each video belongs to its uploader or rights holder and is shown here for commentary; we do not host any of the files.

The clippings

What they said at the time

Press (3)
EToys can take its place in the pantheon of core Internet stocks, like an Amazon.com or an EBay.
Gail Bronson, IPO Monitor, in the Los Angeles Times, May 21, 19994

  1. Toby Lenk, president and chief executive, Dec 15, 20005

    We are disappointed that sales have not materialized to the degree we had expected.

  2. Chris Byrne, toy analyst, in Wired, May 17, 200111

    Their TV advertising alone made eToys a household name, even though the households didn’t necessarily have Internet access. For KB to acquire that is a rip-off.

Part 5 of 6

Verdict

Cause of death · What if · Afterlife

Cause of death

The autopsy

Tap a cause to see the evidence. The percentages are our editorial weighting. The evidence under each one is sourced.

Cause of death, by editorial weight

One square is one percentage point. The weights are our judgment, not a measurement.

  1. 40%Selling at a loss
  2. 25%Building for growth that did not arrive
  3. 25%The capital markets shut
  4. 10%Competition from toy chains online
Data table
Cause of death, by editorial weight
CauseWeight
Selling at a loss40%
Building for growth that did not arrive25%
The capital markets shut25%
Competition from toy chains online10%

In its one full public year eToys earned $29.1M of gross profit and spent $120.5M on marketing and sales, of which $55.5M was advertising and $50.3M fulfilment, service and card fees. It lost $1.26 for every dollar of sales (derived).1

It ran five distribution centres and planned two more of over 700,000 square feet each, then had to close two warehouses when holiday 2000 sales came in at $131.2M against a $210M–$240M forecast.126

After the December 2000 warning, eToys said it needed “an additional, substantial capital infusion” and hired Goldman Sachs to look for a deal. None came, and it filed in March.568

In 1999 Toys “R” Us said it would spend $80M on its website, and KB Toys combined its online business with BrainPlay.com in another $80M venture.4 KB later bought eToys’ stock and name.1011

Editorial judgment: The weights are our judgment of how much each factor contributed. Reasonable readers could weigh them differently.

The fork in the road

What if…

Three decisions where the story could have gone differently. The “What if” panels are speculation, labeled as such.

What happened

The shares were sold at $20 and closed the first day at $76.56. eToys raised $166.4M before fees.34

What if speculative

Its creditors argued the price was set too low. Selling the same shares even at half the first-day close would have raised far more cash for the bad Christmas of 2000. Whether that would have been enough to reach profitability is unknowable.

What happened

eToys planned more than 1.4 million square feet of new distribution space for 2000.1

What if speculative

Using third parties for fulfilment, or growing capacity a year at a time, would have cut fixed costs when sales fell short. It would also have risked the delivery problems the company was built to avoid.

What happened

It hired Goldman Sachs to explore a sale only after the December 2000 warning.56

What if speculative

A merger with a store chain while the shares still traded above $20 might have kept the business alive. In 2001 the only buyer was KB Toys, paying a few million dollars for the pieces.1011

Where are they now

The afterlife

eToys

  1. The name

    Unknown

    KB Toys bought it in 2001; The Parent Company owned eToys.com by 2008; Toys “R” Us bought it in February 2009.1114 etoys.com did not respond when we tried it in October 2026, and we could not establish who owns the name.

  2. The company

    Liquidated

    eToys became EBC I, Inc. Its liquidating plan took effect on November 5, 2002; its assets were to be used to pay creditors and the companies dissolved.12

  3. The inventory

    Sold

    KB Toys bought most of the unsold stock for about $5.4M in April 2001 to sell at its outlets and on KBkids.com.10

  4. The IPO

    In court

    The creditors’ committee sued Goldman Sachs over the offering price. In 2005 New York’s Court of Appeals allowed the fiduciary-duty claim to proceed; it did not decide whether the allegations were true.13 We have not traced the case to its end.

Who owned the name

  1. 1996

    Toys.com / eToys Inc.

    Incorporated in Delaware, backed by Idealab.13

  2. May 1999

    Public (Nasdaq: ETYS)

    Initial public offering.3

    $20.00 a share
  3. Mar 2001

    eToys, in Chapter 11

    Files in Delaware and closes the site.8

  4. May 2001

    KB Toys

    Buys the name, website and software at auction.11

    ≈ $3.4M
  5. 2008

    The Parent Company

    Owner of eToys.com when it filed for bankruptcy in December 2008.14

  6. Feb 2009

    Toys “R” Us

    Buys eToys.com, BabyUniverse.com and ePregnancy.com.14

    Not disclosed
Data table
Who owned the name
WhenOwnerWhat happenedPrice
1996Toys.com / eToys Inc.Incorporated in Delaware, backed by Idealab.
May 1999Public (Nasdaq: ETYS)Initial public offering.$20.00 a share
Mar 2001eToys, in Chapter 11Files in Delaware and closes the site.
May 2001KB ToysBuys the name, website and software at auction.≈ $3.4M
2008The Parent CompanyOwner of eToys.com when it filed for bankruptcy in December 2008.
Feb 2009Toys “R” UsBuys eToys.com, BabyUniverse.com and ePregnancy.com.Not disclosed
SEC filings, Wired and the Los Angeles Times.81114 How the name passed from KB Toys to The Parent Company is not covered by our sources.

Sources & data notes

Show your work

eToys was public from 1999 to 2001, so its finances come from its SEC filings and press releases. The IPO day, the asset sales and the later fate of the name come from contemporary press; the underpricing claim from the court’s opinion. Every link was opened while this page was researched.

  1. eToys Inc., annual report (Form 10-K) for the fiscal year ended March 31, 2000, SEC EDGAR, filed Jun 2, 2000.
  2. eToys Inc., quarterly report (Form 10-Q) for the quarter ended December 31, 2000, SEC EDGAR, filed Feb 14, 2001.
  3. eToys Inc., prospectus (Form 424B4) for the initial public offering, SEC EDGAR, dated May 19, 1999.
  4. Karen Kaplan, “EToys Rockets in Biggest Debut for Southland IPO”, Los Angeles Times, May 21, 1999.
  5. eToys Inc., “eToys Expects Lower Than Estimated Fiscal Third Quarter Operating Results”, press release (8-K exhibit 99.1), Dec 15, 2000.
  6. eToys Inc., “eToys Releases Cost Reduction Details”, press release (8-K exhibit 99.1), Jan 4, 2001.
  7. eToys, Inc., current report (Form 8-K) on the bankruptcy filing, SEC EDGAR, filed May 25, 2001.
  8. eToys, Inc., “eToys Announces Bankruptcy Filing and Securities Delisting”, press release (8-K exhibit 99.1), Mar 7, 2001.
  9. Joanna Glasner, “EToys’ IPO Rocket Ride”, Wired, May 20, 1999.
  10. “KB Toys to Pay $5.4 Million for EToys’ Assets”, Los Angeles Times, Apr 27, 2001.
  11. “KB Toys Gets eToys Web Site”, Wired, May 17, 2001.
  12. EBC I, Inc. (formerly eToys Inc.), current report (Form 8-K) on the confirmation and effective date of the liquidating plan, SEC EDGAR, filed Nov 19, 2002.
  13. EBC I, Inc. v. Goldman Sachs & Co., New York Court of Appeals, decided Jun 7, 2005 (text via Cornell Legal Information Institute).
  14. Associated Press, “Toys R Us buys retailer EToys.com, related sites”, Los Angeles Times, Feb 13, 2009.
Data notes (7)

Data notes

Derived: Loss per dollar of sales: $189.6M ÷ $151.0M = $1.26. Gross margin: $29.1M ÷ $151.0M = 19.2%. Total costs: $122.0M cost of sales + $222.1M operating expenses = $344.1M. Total net losses to December 2000: $2.3M + $28.6M + $189.6M + $196.2M = $416.6M.12

Fiscal years: eToys’ annual report calls the year to March 31, 2000 “Fiscal 1999” in places. We label years by the date they ended to avoid confusion.

Conflicts: The first-day close is $76.56 in the Los Angeles Times and the court’s opinion and $77 in Wired; the opening trade is $78 in the Times and Wired and $79 in the opinion.4913 The company put its liabilities at about $274.0M at January 31, 2001; the Los Angeles Times reported $285M of debts listed in the filing.810

Allegations: The claims against Goldman Sachs are allegations in a complaint. The 2005 ruling only held that one claim was adequately pleaded.13

Unknown: What creditors recovered; how the case against Goldman ended; how the name moved from KB Toys to The Parent Company; and who owns it now. etoys.com did not respond to our requests on October 8, 2026, so we do not link it.

Videos: All air dates are the uploaders’. The retrospective is embedded as commentary; no figure here is taken from it.

Images: The logo is from Wikimedia Commons, marked public domain; its date and owner are not given. The colour swatches are approximations. Drawings are original.

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