eToys' Parent Files for Bankruptcy

DENVER -- Struggling retailer Parent Co. (KIDS Quote) said it has voluntarily filed for Ch. 11 bankruptcy protection and will consider selling some or all of its operations.

Parent Co. took shape in January when the combination of Denver-based eToys with Jupiter, Fla.-based Baby Universe decided to officially change its name to something that described its newly broadened focus on growing families.

The company's name change was one of a series of steps designed to turn around a business with a weak balance sheet in need of new financing.

"This action is an unfortunate but necessary and responsible step to preserve the company's value for our stakeholders in light of the ongoing challenging retail environment," Chief Executive Michael Wagner said in a statement.

Retailers have come under growing pressure as consumers curb discretionary spending due to the ongoing housing slowdown, eroding credit, rising food costs and unemployment concerns.

The company also said late Sunday that it received a letter from Nasdaq stating it currently does not meet continued listing requirements due to the delayed filing of its quarterly report for the period ended Nov. 1.

Parent Co. has until Feb. 23, 2009, to send a compliance plan to Nasdaq, at which point the exchange may give the company until June 22, 2009, to follow through with the plan.

Parent Co. also said it hired Oppenheimer & Co. to help assess its strategic options.

The company's combined operations started to show signs of trouble when it posted a loss of $19.1 million on sales of $106.5 million in the year ended Feb. 2, 2008. Its recent losses left Parent Co. lacking liquidity. By May 3 the company had just $144,620 in cash and nearly $28 million in liabilities.

Parent Co.'s stock has been hit hard as well. Its closing price of 23 cents on Friday is off 96% from its 52-week high of $6.43.