PITTSFIELD, Mass. — Blaming the fierce holiday price wars in toys, KB Toys Inc. filed for bankruptcy protection from creditors Wednesday.
The privately held retailer with 1,300 stores was hit hard by discounters, primarily Wal-Mart Stores Inc., during the holiday season. Last month, it informed suppliers that it was slowing down payments amid sluggish sales.
The filing under Chapter 11 of the federal bankruptcy laws will enable it to develop a financial reorganizaton plan while continuing its business operations.
KB Toys said it hopes to emerge from bankruptcy protection before the 2004 holiday season.
The company, which accounts for about 4 percent to 5 percent of the U.S. toy business, was the second casualty in the toy market this season. In early December, FAO Inc., owner of the FAO Schwarz toy stores, filed for Chapter 11 for a second time.
Toys “R” Us Inc., the nation’s second-largest toy chain behind Wal-Mart, also suffered this past holiday season. Earlier this month, it said its overall sales rose less than 1 percent for the critical holiday sales period, and that sales at U.S. stores open more than a year fell almost 5 percent. The company said profits would be less than expected for the year.
The 80-year-old KB Toys, based in Pittsfield, announced it secured $350 million in financing from the Fleet Retail Group.
Company officials blamed a sharp decline in earnings during the fourth quarter on retailers who cut the price of toys in order to draw customers for other products.