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Pets.com Put To Sleep

/ CBS/AP

is being put to sleep.

The San Francisco-based online retailer, known for its commercials with a sock puppet dog and the slogan "Because pets can't drive" said Tuesday it is closing down after failing to find a financial backer or buyer.

Pets.com said it is laying off 255 of its 320 employees and plans to sell the majority of its assets, including inventory, its distribution center equipment, its Web site address and its Sock Puppet brand. The company turned the company mascot into a marketing icon this summer, selling the licensed puppet, along with accessories, to toy stores nationwide.

The company's e-commerce site will no longer be taking orders after Thursday. John Cummings, director of investor relations, said Pets.com aims to fulfill all of its outstanding orders online and offline.

Shares of Pets.com lost two-thirds of their value Tuesday, falling 44 cents to close at 22 cents a share on the Nasdaq Stock Market.

Pets.com, which sold everything from catnip to biker-style jackets for ferrets, said in a statement that a lengthy and exhaustive effort to raise capital since last summer and most recently to find a buyer proved unsuccessful. In fact, the company said that out of the more than 50 prospects contacted, fewer than eight were even prepared to visit the company.

"It is well known that this is a very, very difficult environment for business to consumer Internet companies," said Julie Wainwright, Pets.com chairman and chief executive. "With no better offers and avenues effectively exhausted, we felt that the best option was an orderly wind down with the objective to try to return something back to the shareholders."

The somber scenario is drastically different from when Pets.com burst on the scene in February 1999. Pets.com, along with its rivals, moved into an area that was much hyped as a potential gold mine, but never lived up to its promise.

Online pet companies found themselves heavily discounting merchandise in order to attract customers, and the category was hit by consolidations, layoffs and missed profit targets. Even Pets.com's February initial public offering failed to attract a lot of interest, according to analysts.

Just last month, , partially owned by San Diego-based Petco, a pet food chain, fired 60 percent of its staff. And Petstore.com closed its doors, selling some of its assets to Pets.com in June.

"The original premise was that these companies could ship 50 pound bags of cat food and make up for the losses in leashes and toys," said Rob Lattner, research director at the Gartner Group. What these players failed to realize was that consumers shop differently in pet stores than they do online, he said.

Pets.com, however, had some strong assets behind it. It was backed by and had a huge consumer following for its sock puppet.

In fact, Pets.com was still marketing its mascot as late as last week, teaming up with toy retailer FAO Schwarz for the launch of its latest talking version. The event attracted several hundred people, according to Allen Marcus, vice president of public relations at FAO Schwarz.

"Sales (of the sock puppet) have been pretty steady," said Marcus, who said he was surprised by the news.

©2000 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed

© 2000 91³Ô¹ÏÍø. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.

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