KB Toys to Close Stores and Hold Going-out-of-Business Sales
Posted on December 11, 2008
Bloomberg reports that KB Toys is filing for bankruptcy and plans to close stores. The toy retailer is citing a sudden drop in sales over the last two months. KB Toys also filed for bankruptcy three years ago and closed half of its stores.
The Chapter 11 filing comes three years after KB Toys ended a previous bankruptcy by closing almost half of its 1,200 stores. The chain has shut hundreds more since amid increased competition from Wal-Mart Stores Inc., Toys "R" Us Inc. and Target Corp., which together control about two-thirds of the U.S. toy market, according to industry analyst Sean McGowan."Just about everyone I've talked to in the toy industry has been concerned about their survival for years," McGowan, at Needham & Co. in New York, said in an interview.
There seem to be a lot of retailers closing stores here in the last couple months of 2008. Britt Beemer, chairman and founder of America's Research Group, told Bloomberg Radio that there will be even more in 2009.
"I think we'll see more bankruptcies in the first six months of next year than we've seen in the past five years combined," Britt Beemer, chairman and founder of America's Research Group, said today in a Bloomberg Radio interview. "We're in a retail environment that clearly I would describe as a retail freefall."
The New York Times DealBook reports that court filings show KB Toys plans to shut hundreds of stores and hold going-out-of-business sales. DealBook says the planned closing include "277 mall-based stores and 114 outlet stores." The WSJ calls the KB Toys bankruptcy a liquidation and adds that KB Toys also runs 40 large KB Toy Works stores which are in strip malls. They write that the company plans to close stores quickly for going-out-of-business sales "in order to take advantage of the last two weeks of the holiday selling season."
KB Toys shutting stores and holding big going-out-of-business sales in the last couple weeks of the holiday shopping season is also likely to make things difficult for rival toy stores like Toys R' Us and FAO Schwarz.