KB Toys Snags Inventory From Bankrupt eToys

KB Toys said Thursday that it is purchasing “substantially all” of defunct e-tailer eToys’ inventory for US$5.4 million, as part of eToys’ bankruptcy proceedings.

KB Toys stressed that although the retail value of the eToys merchandise is estimated to be $40 million, KB Toys does not expect to sell the goods for near that amount.

“It was just a great opportunity for KB Toys,” spokesperson John Reilly told the E-Commerce Times. “We made very good buys and will pass those savings along to our customers.”

Although the eToys domain name was not included in this purchase, Reilly confirmed that KB Toys had bid on the name and could know within several weeks if its bid was successful.

KB Toys’ winning bid for eToys’ inventory is substantially less than a conditional bid of $8 million, placed in March by children’s book publisher Scholastic, for some of eToys’ assets in bankruptcy.

After reportedly winning the bankruptcy auction, Scholastic withdrew its bid hours later, saying that it had “concluded that the acquisition of selected eToys assets did not meet Scholastic’s threshold for accelerating or reducing the costs of its Web initiatives.”

Coming Soon

Reilly said that KB Toys would receive the merchandise within the next two weeks and that it would sell the toys, collectibles, and other merchandise through its stores and the KBKids.com site.

Some of the eToys goods may even find their way to KB Toys’ business-to-business (B2B) site, KBWholesale.com, which was launched earlier this month. Reilly said that he was not sure which stores would receive the toys, but commented that the company was “not ruling anything out.”

eToys’ Story

The sale of eToys assets in bankruptcy comes after a disappointing holiday season signaled the final curtain for what one of e-commerce’s brightest stars.

Launched in 1998, eToys’ meteoric rise soon made the company one of the most recognizable names in cyberspace. However, red ink spread across eToys’ balance sheet in 1999 and 2000, and the value of the company’s stock sank.

After sales during the past holiday season failed to meet goals, eToys slashed 70 percent of its workforce, or about 700 employees, in January. A month later, eToys said that it would wind down operations and lay off its remaining employees by the beginning of April.

On March 7th, eToys filed for bankruptcy in U.S. Bankruptcy Court in Delaware and put its assets — including its inventory, warehouses and customer database — on the auction block.

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