Toys R Us filed for bankrupcty late last year, stoking concerns about its future going forward. The venerable retailer outlasted a large number of competitors. Here’s a look back at toy stores that went out of business.
Kay Bee, also known as KB Toys and KB Toy and Hobby, was the king of mall toy stores for decades. In 2000, it underwent a leveraged buyout by Bain Capital that left it saddled with debt. It went out of business in 2009, and Bain Capital’s role in its demise became a controversy affecting Mitt Romey’s 2012 presidential campaign. I have a more complete account of Kay Bee’s downfall here.
It is one of perhaps two examples on this list of toy stores that went out of business unnecessarily, due to mismanagement by its parent company.
Lionel Kiddie City / Lionel Playworld
After Lionel Corporation sold its train business to General Mills in 1969, it became a holding company that owned and operated Lionel Kiddie City and Lionel Playworld. These were big-box toy stores similar in concept to Toys R Us. In the early 1990s, the operation ran into financial difficulty and considered merging with Children’s Palace. The deal didn’t go through and the two chains, along with its legendary parent company, went under in 1993. The train business survives as part of Guggenheim Partners, a private venture capital firm
Children’s Palace / Child World
Children’s Palace and Child World were a big box chain store, similar to Toys R Us in size, format, and selection. The store exteriors resembled a castle, with turrets and arches. At its peak, it operated 182 stores and had an annual revenue of $830 million. Children’s Palace was founded in 1967. Child World was founded in 1970 and acquired Children’s Palace from its owner, Kobacker Stores, in 1975. Cole National acquired the chain in 1981 and continued to operate it as a subsidiary.
Child World utilized a supermarket-style format and was popular, especially in the midwest. It ran into financial difficulty in 1990, as its parent company, Cole National, restricted its cashflow. This resulted in financial disputes with a number of toy manufacturers. This combined with the recession later in 1990 and a slow 1990 Christmas retail season to give the company a shortfall of more than $190 million at the end of the fiscal year. Turnaround efforts in 1991 failed, as did a buyout offer from an unnamed suiter. Child World filed for Chapter 11 bankruptcy in April 1992 and attempted to merge with Lionel that summer. A July 12 deadline for merging came and went, and the two companies continued talks until August 2, when they abandoned the plan. The final remaining stores went into liquidation and were out of business by the end of September, 1992, ending a quarter-century run.
It is possible that if Cole National had helped the chain avoid payment disputes with key toy manufacturers, Children’s Palace and Child World wouldn’t have had to join the ranks of toy stores that went out of business.
All Wound Up
All Wound Up was a mall-based toy store from 1994 to 2001. Its parent company also owned the Borders and Waldenbooks book chains. Frequently these were popup stores.
FAO Schwarz was founded in 1862 and was once the oldest toy store in the United States. The flagship store on Fifth Avenue in New York City was featured in a scene in the Tom Hanks movie Big. FAO Schwarz changed hands several times starting in the 1960s. In the 1990s, its then-owner opened about 40 stores nationwide. In 2001, the chain changed hands and 18 of the stores closed. A series of bankruptcies followed, culminating in more closures. Eventually in 2009, Toys R Us ended up owning what was left. The Las Vegas store closed in 2010 and the flagship New York City store closed in 2015. It survives as a boutique sub-store in some Toys R Us locations, and Toys R Us plans to reopen one location in New York in the fall of 2018 so this iconic store may emerge from the list of toy stores that went out of business.
Warner Bros Studio Store
The Warner Bros Studio Store was a chain of stores selling Warner Bros.-themed merchandise from 1991 to 2001, similar in concept to Disney stores. The chain survived a few more years overseas but the chain is now defunct.
Zany Brainy was once a high-flying chain specializing in educational toys, with 187 stores. It closed in 2003.
Noodle Kidoodle was another chain that specialized in educational toys. Zany Brainy acquired it in 2000, three years before going under itself.