January 19, 2001, 12:00 AM

Etoys Reports Heavy Losses Amid Strong Sales

Don Davis

Editor in Chief

In what seems to be a trend for Internet merchants, yet another big e-retailer has reported steep losses despite record sales during the holidays. Etoys, the most visited Internet toy retailer last Christmas, says its third-quarter loss increased due to higher-than-expected costs. Although the Web store logged record visitors and sales in December--building a customer base of 1.7 million last month--the company lost $75.5 million, or 63 cents per share. The announcement comes a day after a similar situation at computer retailer, Dell, which despite pulling in millions in revenue through e-commerce, announced yesterday that its earnings and revenue fell short of expectations for the second quarter in a row.

Mike May of Jupiter Communications says today's lagging stocks following the busy holidays send a message from Wall Street. ãYou canât dominate if you exist in only one channel, be it online or brick-and-mortar," says May. "You can have a nice business, but youâll never command the market share.ä

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