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Softbank to help Toys 'R' Us?
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February 23, 2000: 6:53 p.m. ET
Japanese venture capital firm may help toy retailer energize Web site
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NEW YORK (CNNfn) - Shares of Toys "R" Us slid Wednesday amid reports that Venture Capital firm Softbank is making a $60 million investment in the toy retailer's Web site, www.toysrus.com.
Shares of the Paramus, N.J.-based retailer closed down 1/8 to 11-1/2 on the New York Stock Exchange Wednesday.
Toys "R" Us (TOY: Research, Estimates) officials, as well as officials at Softbank Venture Capital in Mountain View, Calif., a part of Japan's Softbank Corp., could not be reached for comment about a report in Wednesday's Wall Street Journal that Softbank planned to invest in the toy retailer's web site.
Toys "R" Us has had trouble pitting its Web site against rivals such as eToys Inc. (ETYS: Research, Estimates) and Amazon.com (AMZN: Research, Estimates).
But Sheldon Grodsky, an independent retail analyst, said the well-known brand name combined with actual bricks-and-mortar stores, should form a winning recipe for the company's online sales.
"The key thing isn't the money. They're (Softbank) making an investment, so they're essentially becoming a partner," Grodsky said. "I think people want a lot from Toys "R" Us. This is a company whose history is in the brick side, and for various reasons has the right ingredients for becoming a strong bricks and clicks."
Grodsky said with plenty of financial backing and a host of retail stores in which customers can return merchandise easier than having to return products via mail to other Internet-only competitors, Toys "R" Us should be able to shore up its online business.
Toys "R" Us previously formed a partnership with Benchmark Capital, another Silicon Valley venture-capital firm, the Journal reported, but disagreements on ownership of the Web site caused the deal to fall apart.
Toysrus.com recorded sales of $39 million during the holiday season, and $44 million for all of last year, the Journal reported. Internet sales were strong despite widely publicized problems with out-of-stock inventory.
The No. 1 Internet toy seller, eToys.com in Santa Monica, Calif., posted $106.8 million for the quarter that included Christmas. 
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Toysrus.com
eToys.com
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