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e-Toys toys with a loss
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July 27, 1999: 6:14 p.m. ET
Online toy store posts fiscal first-quarter operating loss as expenses rise
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NEW YORK (CNNfn) - e-Toys Inc. Tuesday reported a fiscal first-quarter operating loss of $20.8 million as the e-tailer poured its resources into boosting its recognition on the Net.
In its first three months as a publicly traded company, e-Toys posted a loss of 21 cents a diluted share compared to $2.17 million, or 4 cents a share a year earlier.
Sales for the quarter rose to $8 million from $381,000 a year earlier. Revenue from repeat customer orders represented more than 40 percent of total sales at the end of June.
Excluding expenses related to expanding the company's infrastructure and boosting its brand name presence, e-Toys posted an operating loss of $21.7 million compared to an operating loss of $2.17 million a year ago.
Deferred compensation costs and amortization of goodwill - a new fad among Internet companies who make longer-term deals without swapping cash or stock - left the loss at 17 cents a share, slightly ahead of analysts' estimates. In the year-ago period, eToys reported a loss of 3 cents a share on a comparable basis.
"Our most important achievement to date is having established a definitive online leadership position through our sole focus on the estimated $200 billion global market for children's products," said Toby Lenk, e-Toys' chief executive officer.
Spending on brand name development - a crucial part of any e-commerce Web site - accounted for much of the operating loss during the quarter, the company said. Expanding its product and service offerings and building the infrastructure to accommodate the expansion also dented its balance sheet it said.
e-Toys entered an agreement during the quarter with Fingerhut Business Services Inc., a unit of Federated Department Stores Inc. (FD) to expand its shipping capacity.
e-Toys also acquired BabyCenter Inc. during the quarter, allowing the online retailer to provide content on pregnancy and babies and to add baby products to its roster of goods for sale. BabyCenter has its own separate Web site at www.babycenter.com
Cumulative customer accounts at the end of June rose 28 percent to 467,000 from 365,000 at the end of March.
Santa Monica, Calif.-based e-Toys (ETYS) completed its initial public offering in May of 9.6 million shares at a price of $20 a piece, allowing the company to raise $192 million. Its shares ended the day Tuesday up 2-21/32 at 39-9/32. 
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