Pittsfield, Mass.-based KB will pay about $5.4 million for the inventory, company spokesman John Reilly said. The company plans to sell the inventory, valued around $40 million, at a discount through its outlet and retail stores as well as through its KBkids.com Web site, he said.
"We are pleased with the outcome of this proceeding and look forward to passing these tremendous values on to our customers," Michael Glazer, chief executive of KB, said in a statement.
eToys representatives did not return calls seeking comment.
After its revenue for the holiday season fell far short of expectations, eToys announced that it was running out of cash and would close shop by the spring unless it had a cash infusion. The company laid off all of its 1,000 employees in two separate job cuts in January and February, and filed for Chapter 11 bankruptcy last month.
KB has had its own shake-up in recent months. In December, the company's management teamed up with Bain Capital to buy the company from Consolidated Stores and take it private. Meanwhile, the company's KBkids unit fired Chief Executive Srikant Srinivasan last May and laid off 30 percent of its work force.
KB expects to receive the eToys inventory within the next two weeks, Reilly said. He didn't know what specifically the inventory contained, but said it included a number of specialty and collectible items.