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eToys rings up a surprise
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October 28, 1999: 4:43 p.m. ET
Online children's retailer posts wider loss, but results still beat expectations
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NEW YORK (CNNfn) - The bottom line at eToys Inc. went deeper into the red Thursday, but still managed to beat Wall Street's second-quarter earnings expectations due to rapidly rising sales.
The Santa Monica, Calif.-based children's products retailer posted a loss of $32.08 million, or 27 cents per share, for the fiscal second quarter ended Sept. 30, excluding non-cash charges for deferred compensation and amortization.
That was well below the $3.2 million, or 4 cents per share, loss the company reported during the same period last year, but slightly better than the consensus analyst estimate of a 28 cents per share loss, as compiled by research firm First Call Corp.
The company reported its earnings after the markets closed.
Much of the loss was attributable to a substantial rise in marketing and sales expenses, up more than seven-fold to $20.01 million, and product development expenses, which climbed to $12.18 million from $697,000 a year earlier.
Company officials said both increases were necessary to build up consumer awareness of eToys and its products.
In one possible sign those efforts are paying off, eToys managed to increase its revenue stream significantly, growing net sales to $13.3 million for the quarter, from $600,000 last year.
In addition, the company reported customer accounts at its eToys and BabyCenter subsidiaries increased more than 30 percent over the previous quarter to 611,000 accounts. Repeat customer orders represented roughly 42 percent of the orders placed during the quarter.
Toby Lenk, eToys' president and chief operating officer, said recent efforts to enhance the company's operations and aggressively market its products have positioned the company well for the upcoming holiday season.
Through the first six months of the company's fiscal year, eToys lost $49.01 million, or 45 cents per share, down substantially from the $5.28 million, or 7 cents per share, it lost last year.
eToys' stock fell 2-9/16 to 70-5/8 during regular trading hours and remained unchanged in after-hours trading as of 4:20 p.m.
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eToys Inc.
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