Bankrupt KB Toys Closing All Stores

Weak sales push venerable toy seller into the red

In yet another sign of a collapse in consumer spending, KB Toys Inc., a staple of shopping malls coast to coast, says it's bankrupt again and will close all its stores.

"The liquidity crisis is directly attributable to a sudden and sharp decline in consumer sales, due to macro-economic forces," the company said.

The company previously reported that same store sales took a dramatic 20 percent decline in the critical early October to early December sales period.

The decision means that the nearly 460 KB Toys stores will be running liquidation sales in the closing days of the holiday shopping season, perhaps putting additional pressure on its competitors. Consumers should be able to find popular toys at steep discounts, until supplies run out.

Consumers with KB Toys gift certificates and gift cards should consider using them as quickly as possible. According to Consumer Reports, retail stores appear to still be honoring gift cards but the Web site did not accept a "test" purchase attempted Thursday evening, using a gift card.

A check Friday morning by showed no information on the KB Toys Web site, or any indication that anything out of the ordinary was taking place. In fact, the site still promotes "no payments until April 2009."

KB Toys is not only one of the nation's largest retail chains, it's also one of the oldest. It began as a family owned business in 1922. It's been owned by Prentice Capital Management, Inc. since 2005, when it emerged from bankruptcy.

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