According to an article in The Berkshire Eagle, its hometown newspaper, KB Toys will not attempt to get out of Chapter 11 bankruptcy before the holidays as the company had originally planned (see 'KB Toys Files for Chapter 11').
Since filing for Chapter 11 in January, KB Toys has shed nearly one third of the 1200 outlets the company had when it filed for bankruptcy protection. KB has also trimmed its workforce by a third (down to 8,000) and plans to hire about 9,000 seasonal workers for the holiday season. KB reported operating losses of $4.35 million for the month of August and cumulative losses of $115 million since the bankruptcy filing.
KB is still looking for a suitable suitor, though it appears that there is not enough time for any buyout to be completed before the holiday selling season, when toy retailers reap the majority of their profits, which means that the chain retailer will remain under court supervision during this crucial period.
KB Toys stores are currently featuring a 'yellow tag' 30% off sale, but even that might not be enough to survive in the ultra-competitive retail toy market, especially if Wal-Mart continues the full-court press it implemented during the 2003 holiday season (see 'Wal-Mart Applying Toy Category Kill Shot').