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What Happened to KB Toys? (and Why Did They Close?)

What Happened to KB Toys?

As someone who was born in the late 80s and grew up during the 90s. it is sad to see how many stores from our childhood have vanished.

Blockbuster Video went from being a weekend plan for many to just one store left in North America (in Bend, Oregon).

Toys ‘R Us was also a staple during my childhood that unfortunately went through a similar disappearance unless of course, you live here in Canada.

Funcoland was bought out by Gamestop and it’s starting to look like they too are on their last leg.

I could go on about how many other retailers are no longer around but this is about another childhood favorite of the eighties. What happened to KB Toys?

KB Toys went out of business. After multiple sales and bankruptcy protections, KB toys was finally closed down in February 2009. The brand was acquired by Toys R Us then purchased back by Strategic Marks in 2016.

But before we talk about the end let’s talk about the beginning. The history of where KB Toys began and what happened when the retailer met its demise. 

100 Years Ago There Was A Candy Store

In the 1920s, KB was not a toy store. KB stood for Kaufman Brothers, the owners of the store. It was originally a candy store. The Kaufman Brothers would be running a candy store for twenty years before they started selling toys.

KB Toys Started As A Candy Store

A client who owed the Kaufman brothers a lot of money used his toy company as compensation when he couldn’t pay off his debts. In September of 1946, the Kaufman Brothers opened their own toy store. After two short years, they decided to close the candy store and focus exclusively on the toy market.

The decision to close the candy store was not made because the business was doing poorly. The candy store had continued growing and was doing just fine. However, the Kaufman brothers wanted to devote all their time to their toy store business.

The First “Kay-Bee” Toy Store

In 1973, the Kaufman Brothers went from selling children’s toys wholesale to opening a storefront in a shopping mall. At the time it was known as Kay-Bee Toy & Hobby. It was changed in 1977 to Kay-Bee Toy and Hobby Shops Inc. From ’73-’79 they went from 26 to 170 chains.

Store aisle full of toys

By 1981 they had 210 retail stores and the Melville Corporation purchased the company from the Kaufman Brothers for 64 million dollars.

Two years later they bought out most of the Toy World Stores from Wickes Companies and Kay-Bee took over the leases for those spaces.

The next acquisition that the Melville Corporation made was 330 Circus World stores. They would also purchase K&K Toy stores a year later, which gave the Melville Corporation an additional 136 stores.

The First Signs Of Trouble

1994 was also notable because the chain was on target to meet the same sales levels as their competitors Toys ‘R Us. However, it was also during 1993 & 1994 that Kay-Bee had to close 250 stores that weren’t bringing in enough money to stay profitable.

A rebranding of sorts also took place around this time as all Kay-Bee’s newest stores would be called KB Toy Works.

Kid Shopping For Toys in a KB Toy Store

KB Toy Liquidators was also created to appear in outdoor malls, and there would be stores that would be open for a short amount of time during the holiday season that were named KB Toy Express.

Sales had reached 1.1 billion dollars in 1996 and Consolidated Stores Corporation became the new owners buying the company for 315 million dollars. Two years later, sales had increased by half a billion dollars and they went on to launch their first website. 

In May of 1999, there were over 1300 KB stores. Consolidated Stores Corporation made a deal with Brainplay.com to takeover the website and Brainplay would own 20 percent of the KB site. Brainplay would improve the website and relaunch it in July of the same year.

The new website had the web address of KBKids.com and Consolidated Stores landed a private deal with internet giant America Online which allowed them to reach millions of American customers.

KB Toys Goes Public

In January of 2000, KBKids was listed on NASDAQ as a publicly-traded company. Due to lacking sales of video games and the website not bringing in the cash they had hoped, the decision was made to sell KB Toys in June 2000.

Bain Capital would buy KB Toys in December of 2000 for 305 million dollars. All variations of KB stores were included in this sale. KB Toys was no longer a publicly traded company. The new owner’s focus was to increase video game sales, which were only 20% of the brands’ income at the time.

KB Toys opened temporary pop-ups inside Sears department stores to capitalize on the holiday rush. KB Toys also spent over five million dollars to increase its video game inventory.

Let The Bankruptcy Protection Begin

After the holiday season of 2003, they couldn’t continue to compete, especially with attendance in stores decreasing. They were 300 million dollars in debt and had to file Chapter 11 bankruptcy protection and close 600 stores for good.

KB Toys Files For Bankruptcy Protection

In February of 2005, different creditors of KB accused executives and shareholders of authorizing giant payments right before they filed the bankruptcy. It is worth noting here that GOP presidential candidate Mitt Romney was part of the private equity firm at the time, and is thought to have made out pretty well.

 The complaint of creditors said that payments in 2002 were irresponsible when business and the economy were decreasing.

Bain Capital was sued by Consolidated Stores arguing they were owed 45 million dollars when the sale of the business happened in 2000. The lawsuit from Consolidates Stores was dismissed in 2006.

KB toys exited Chapter 11 bankruptcy in 2005 and Bain Capital tried to retain control of the company. However, a judge awarded control to Prentice Capital. In August of 2007, Prentice Capital had 566 stores and they closed 122 of those stores.

KB Toy Stores started closing down

Sales at the malls weren’t saving the company. Also, the competition was costing KB money and the company filed Chapter 11 bankruptcy again in December of 2008. They had a total of 461 stores in 48 states as well as Puerto Rico and Guam. The company started liquidating its product at a discount.

The End Of KB Toys

The sales ended on February 9, 2009. This was the day that the website was also shut down. Streambank sold the logo, website, trademarks, and rights to creations of KB to Toys ‘R Us. Toys ‘R Us did use the KB logo on toys they manufactured and under the name KB Classics.

Strategic Marks had planned to bring KB Toys back when Toys ‘R Us let their ownership of the KB name run out. The strategy was to launch several stores and keep the ones that performed well open. These stores still haven’t opened up and there are no indications that we will be seeing them soon.

Is KB Toys Coming Back?

It is a possibility KB Toys could make a comeback. It would be nice to see a company for my childhood rise again, especially with the shaky future of Gamestop. Only time will tell if KB Toys will not only be in our past but also our future.

KB Toys went out of business

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