PITTSFIELD, Mass. -- KB Toys Inc. filed for bankruptcy Wednesday, blaming a fierce holiday price war in toys.
The privately held retailer had stiff competition during the holidays from discounters, primarily Wal-Mart Stores Inc. Last month, it informed suppliers that it was slowing down payments because of sluggish sales.
KB Toys, which accounts for about 4 percent to 5 percent of the U.S. toy business, is the second casualty in the toy market this season. In early December, FAO Inc., owner of the famed FAO Schwarz toy stores, also filed for Chapter 11 bankruptcy court protection.
Officials blamed KB's sharp decline in sales and earnings on the increasing use of toys as loss leaders by merchants during the early part of the holiday season and on increased price competition in the toy market. Wal-Mart slashed prices on hot toys in October, several weeks earlier than in the past.
In its petition filed in U.S. Bankruptcy Court in Delaware, the retailer listed $507 million in assets and $461 million in liabilities as of Jan. 3.
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