A New Low: KB Toys is Bankrupt

Santa might want to reconsider making his own toys up there on the North Pole during these last couple of weeks. There are some mighty good deals to be had at KB Toys.

The 86-year old toy chain filed for bankruptcy on Thursday for the second and final time. It went bankrupt three years ago and managed to reemerge after shutting half its stores. This time, however, it plans to begin going-out-of-business sales immediately and close all of its 277 retail stores. It will also try to sell its wholesale business.

KB Toys' filing cited "a sudden and sharp decline in consumer sales," which speaks volumes about the dismal retail environment considering it's coming from a toy chain just 14 days before Christmas.

The company said it made about $480 million in annual revenues but it currently has as much as $500 million in debt. Analyst Jim Silver told the Associated Press that the company had struggled since it emerged from bankruptcy in 2005 and manufacturers had balked at shipping the "hot" toys of the season to them in recent months. KB Toys also suffered because it chose not to sell videogame consoles like the popular Nintendo Wii.

The retailer had also been hit hard by increasing competition from larger stores like Wal-Mart and Target.

Of course, if Santa decides to shop discount this season, there will likely be some laid-off elves to drown their sorrows with some of the 11,000 KB Toys employees.

by Megan Barnett