EToys to cut 700 workers

Embattled online toy retailer eToys Inc. said Thursday it plans to lay off 700 of its 1,000 workers as part of an effort to cut costs in the wake of holiday sales that were much lower than expected.

Los Angeles-based eToys said 380 employees were being let go immediately, while the other 320 people who are due to be laid off will continue working through the end of March. The cutbacks come less than a month after the online retailer warned that it will need a “substantial cash infusion” in order to continue operating beyond March.

As part of this afternoon’s announcement, eToys also said it will close warehouse facilities in California and North Carolina within the next 30 to 60 days and consolidate those operations into two other distribution centers. The online retailer also formally disclosed plans to close its U.K.-based Web site later this month and fully wind down its European operations shortly thereafter.

eToys already had posted a notice on the U.K. site detailing the planned Jan. 19 shutdown. As part of the closing, eToys said it’s cutting prices by 50 per cent on all products sold through that Web site and only accepting returns of items bought after Dec. 29 if they’re defective or were shipped in error.