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KB Toys to liquidate

By Staff -- Gifts and Dec, December 11, 2008

PITTSFIELD, Mass.—KB Toys said today in a newly filed Chapter 11 bankruptcy petition that it plans to begin going-out-of-business sales at all of its retail stores immediately.

The move was the result of a “sudden and sharp decline in consumer sales due to macro-economic concerns,” according to KB Toys vice president and comptroller Raymond Borst in the company's filing. In particular, he pointed to a nearly 20 percent drop in same-store sales between Oct. 5, 2008, and Dec. 8, 2008. In the previous eight months of its fiscal year, same-store sales had been up 0.36 percent.

"In light of, among other things, the erosion in sales, the Debtors reviewed their liquidity needs and investigated a number of potential alternatives to address their projected liquidity shortfall," Borst said in an affidavit supporting the move. "None of those potential alternatives, however, proved to be viable and thus, it became apparent that the liquidation of their retail-based operations through expedited and orderly going-out-of-business sales within chapter 11 was the best option for the Debtors to maximize the value of their business."

In addition to closing its 277 mall-based stores, 40 KB Toy Works stores and 114 outlet stores, KB plans to sell its wholesale business, Creative Innovations & Sourcing, which supplies toys to retailers CVS Pharmacy and Supervalu, and home shopping network QVC. The company also operates 30 temporary "Holiday Stores." 

KB employs approximately 4,400 full-time workers and more than 6,500 seasonal employees. 

As of November 29, on a consolidated basis, KB Toys had assets worth approximately $241 million and total liabilities of approximately $362 million. The liabilities consist of approximately $127 million in senior secured claims (inclusive of approximately $29 million of outstanding letters of credit) and approximately $143 million of unsecured claims including, outstanding trade payables and other accrued liabilities, according to government documents. The retailer said it has annual sales of approximately $480 million.

A list of KB's largest creditors can be found here.

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Submitted by: David Cuff
2009-03-19 17:21:00 EDT
Location: Middle TN
Occupation: Retail, Former Ast. MGR of Store 0526


I have to agree with some of the other former employees. Yes, the business model that Andy and the rest of HO ultimately did not work, however, parts of it were successful, provided that you had DSMs and RDs that were willing to think "outside of the box" to maximize sales potential. I can sit here & thump my chest like the others on the subject, but I'm not gonna do something that's been beaten to death. I've worked for KB Toys since 1998 ...had awesome selections of toys then...gradually noticed the shrinking numbers...didn't help the fact that most of the time we never really had a DSM or RD that actually cared about success...wasn't until the beginning of 2008 that we finally got a DM that cared, IMO.




Submitted by: KB MGMT.
2009-01-22 17:43:00 EST
Location: EAST COAST
Occupation: MANAGER


James Jenson,
You don't know what your talking about.KB toys was so Top heavy in the executive Mgmt.dept. and this included Dsm's. who did NOTHING to help the hard working managers and staff in the field, caused this once great company to close.When your company is not making money the dsm's should stay at a motel 6 not the marriott.Give them 30 stores instead of 15 at $60'000 a year at least till things start looking up.(they never did a damn thing anyway).Now i'm out of a job because of suits that should have been in khakis and polos working thier butts off like the rest of us... Thanks buttknobs...




Submitted by: James Jensen
2008-12-17 23:40:00 EST
Location: Bend, Oregon
Occupation: Education- Former Manager~ 0710, 0715, 0718, 0738, 0846, 1874, 2410


We need a bail out plan from Presdient Bush for KB Toys! I hope all the employees are holding up and keeping positive thoughts. My heart is with you all and KB Toys is in my thoughts often. I just watched a video of a Kay Bee Toy television ad and those who made that no doubt couldn't fathom the thought that the company in less than 17 years would be gone.




Submitted by: Chris
2008-12-16 23:58:00 EST
Location: somewhere
Occupation: store manager


I've been with KB for 11 years, and a store manager for 7 of them, and I've never been through a fourth quarter like this one. No payroll for trucks, constant event changes, and tons of money wasted on signage. We worked 65 to 70 hours a week, because we took pride in our stores and loved our jobs, and it still wasn't enough. We were micro-managed by 2 people that didn't have a clue how to make each individual store successful. KB was successful when managers were allowed to manage, and didn't have to leave merchandise that didn't sell, in a prime spot because a picture showed it HAD to be there. It's a shame it has come to this. Thank you to all of the people that made KB an awesome place to work, and tried to keep our spirits up when we were so beaten down. Merry Christmas to Andy, I'm sure your family won't do without.




Submitted by: Erika E.
2008-12-14 21:24:00 EST
Location: Albany, NY
Occupation: Clerical/Administrative


I worked at Kay-Bee Toys for almost 5 years and everyone I worked with in the store was very "close-knit" and we all looked out for each other. I'm a big kid so it was fun being able to play with all the new stuff we got in and I had no shame in jumping on the bouncy-bounce we had in the store! Even after I left over a year ago whenever I was in the mall I would still stop in and see everyone. I still keep in touch with a few of my old bosses. I even remember shopping there as a kid. It's sad to see it go!




Submitted by: employee
2008-12-12 11:58:00 EST
Location: eastern states
Occupation: retail sales


I have only been working for KB a few months; and I love working for the company and my manager is probably the best, easy going, but policy following manager I have ever worked for. I will miss working with him and our crew. The sad thing is we are a newer store that has actually been doing great in our sales, making over plan most of the time. It is a shame that the rest of the chain hasn't been as lucky in sales. This is a sad time for all.

Yes, this has probably been coming and I had my doubts on the chain's future due to other area stores either once on the closing list or actually closing. I was brought up to think positive and I was!

Those of you who are happy about this closing and actually posting it are very cruel to have not a sensitive bone in your body for those who have not only lost a job; but those who actually lost a career in retail sales or management. With most companies downsizing due to the economy it is going to be very hard to find similar work at similar pay to support our families.

I do agree with one comment left about the chain. We needed to carry the "hot toys/games" priced competitively and less super value or older released products. If we had carried the Wii and other play systems along with the new releases for game titles that we had MANY, MANY people in looking for; our sales volume would have showed greater numbers.

I basically want to thank the RM, DM and local branch managers for all their hard work in trying to keep this business/family together and wish everyone much success in whatever they end up doing after the final day of business with KB Toys. I will miss the crew and the job; as I loved mine and loved working with the customers. Having a grandma or granddad come in with no idea where to even start looking and being able to help them shop; having them walk out with a huge bag of toys, a smile and greatful "Thank you" for helping them to make some little boy or girls christmas a happy one can never be replaced.

Good luck to all and my prayers are with all of our families in this time of need.




Submitted by: James Jensen
2008-12-12 05:50:00 EST
Location: Bend, Oregon
Occupation: Education - Former MGR of 0738, 0846, 0710, 0718, 0815, 1710, 2410


I started working for Kay-Bee Toy and Hobbies in 1985. I never thought this day would come. It's pointless to play the blame game now. I feel sick inside and my heart goes out to ALL the employees- from management down to the p.t. stock clerk. KB Toys had a great history and so much potential. I often wished I could buy a franchise from them as I now live in an area that never had KB Toys, yet so many people in the the region wished there was one.

Alas, all good things must end. I just never thought it would end like this. I always hoped to go back and pick up where my career left off, but now that won't happen.

The KB family is in mourning, and I share your grief.




Submitted by: kb employee
2008-12-11 22:48:00 EST
Location: northeast
Occupation: assistant store manager


I have been an assistant manager for KB Toys for close to two
years, and an associate for three years prior. To be quite honest, it was
absolutely known that this was coming. Operational management
informed corporate consistently about shortcomings in a number of
business trends. Inventory was always our biggest concern, begging
for the toys that our customers wanted and prices that would keep us
competitive. Andy Bailen's answer was the super value program; cheap
generic toys that were still overpriced for there worth. In my store in
particular we would find ourselves with entire sections empty, and
customers asking why we were completely out of say, fisher-price. It
would take up to three weeks to replenish these sections, with calls to
merchandise allocators left for answering machines. On multiple
occasions we would have to ship thousands of dollars worth of super
value crap to other stores in order to free up inventory dollars for
decent product. As far as pricing goes, our sales were constantly
misleading and left customers feeling as though they had been tricked.
Offering bonus cards that had so many stipulations left customers
hesitant to return to kb toys rather then incite the "bounce-back" that
corporate had anticipated. Huge signs boasting savings of fifty percent
left me looking foolish when customers asked what was actually priced
that low. I'd have to point to the tiny lettering that said "up to" right
next to the huge fifty percent off, and explain that we had sold out of
much of the fifty percent off product, when in fact we never had any.
I do have to say that while I worked at kb toys, I met the most
hard working people in my life. Salaried store managers often worked
in excess of fifty-five hours a week to accomplish the tasks that would
make their stores prosper. On many occasions, hourly managers
worked off the clock due to work overloads with limited payroll. When
this was mentioned we were told to review the freight processing
procedure in order to accomplish tasks in a timely manner. For a
number of reasons this did not work, not just at my store, but at a
district level. Senior management should have realized that while their
plans looked great on paper, they failed miserably in practicality, and
because of that the stores and staff suffered. Floor maps were planned
that made little sense in the stores. Often we would have to think for
hours about ways that would satisfy company directive, while
maintaining product position that would maximize our sales. On one
occasion when we were explicitly told to follow the map to a tee, we
did. And our sales suffered. Several days later a member of senior
management visited and asked us to redo the whole front of the store
in a way that we had planned in order to put product where it made
the most sense for our store.
Ultimately, this rant can do nothing other then express my
concern for the way senior management operates. If you are a DM, RD,
or any other type of area management for another company, you need
to realize that not all of the operational management members are
dumb. They truly care about their stores and want to do the things that
will make them successful. You also need to realize that you do not
always know what those things are. When we screamed about shoddy
inventory, misleading sales, poor equipment, and limited labor you
should have listened, rather then deflecting those concerns. We might
still be in business.




Submitted by: John B. Matthews
2008-12-11 20:49:00 EST
Location:
Occupation:


I do indeed feel sorry for the people losing their jobs. But this doesn't take away the fact that the company was misguided, mismanaged and doomed to fail. I believe strongly that if the company had gone fully towards the boutique image it was trying to create a few years ago it possibly could have survived. Find a niche and exploit it. Trying to compete with discounters was doomed to fail in stores of KB's small size. Especially when the items that you're deep discounting are last years, or the years before model.




Submitted by: D. Harrison
2008-12-11 20:47:00 EST
Location: Texas
Occupation: Mom


KB Toys had lots of toys that Toys R Us didn't have, and much more knowledgeable employees. It was fun going in there, instead of the competitor's huge toy stores-a little more like a neighborhood toy store. The writing was on the wall for KB Toys, but it is a shame.





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