Corporate Obituaries: KB Toys

KB Toys, purveyor of mechanical puppies and temper tantrums, passed away on December 11, 2008 - shortly before the Christmas shopping peak. The famed toy retailer was 86.

KB struggled through 2 Chapter 11 bankruptcy filings before finally succumbing.

Born from humble beginnings in Pittsfield, Massachusetts in 1922, this modest enterprise supplied retailers with candy and equipment for soda fountains. It took its very literal name -- Kaufman Brothers -- from its founders, brothers Joseph and Harry Kaufman.

The company’s foray into toys occurred under unusual circumstances: When a client was unable to pay outstanding debts from previous candy sales, they assumed his wholesale toy company.

The timing was fortuitous, as rationing during the Second World War led to shortages in confectionery ingredients. Once the toy business surpassed its stick-sweet counterpart, the 2 entrepreneurs focused exclusively on playthings.

It was in 1959 -- at the age of 37 -- that the company spawned its first Kay-Bee Toy & Hobby in Connecticut. There, the outfit operated as a wholesaler for 14 years before dipping its toe in retail.

During the 1970s, retailers could hardly resist the intoxicating highs of suburban malls - and Kay-Bee was no exception. It had 210 locations by 1981.

Following an acquisition by the Melville Corporation that same year, Kay-Bee became even more prominent in shopping malls - and shunned free-standing locations. But by the mid-1990s, corporate restructuring and a lack of new shopping centers forced it outside its comfort zone, where it opened a series of storefronts under the name Toy Works.

It was around this time that Kay-Bee became nomadic - drifting between corporate parents like Consolidated Stores Corporation and Prentice Capital Management. The company attempted a reinvention, changing its name -- again -- to KB Toys and launching an online division called KBkids.com.

Although the chain showed signs of life after amputating half of its stores, it was too late: The sales decline had already spread to its remaining 461 locations.

KB Toys is survived by competitors Wal-Mart (WMT), Toys 'R Us and cheap toy racks in gas-station convenience stores nationwide.