The company blames its financial woes on the price wars during the recent holiday season in which mass merchant's used toys as loss leaders and increasing price competition during the rest of the year. Another toy retailer, FAO Schwarz, which is operated by FAO Inc., applied for Chapter 11 bankruptcy protection a month ago.

Among its closings in the state are stores in Brookline, Hadley, Kingston, Saugus, Springfield, Swansea, Watertown and Worcester. KB received approval from the US Bankruptcy Court to engage the Ozer Group LLC, the Nassi Group LLC and SB Capital Group LLC as its agents to conduct the store-closing inventory sales in at least 356 of the stores beginning Jan. 29. By Feb. 11, the company says it will identify an additional 19 to 115 stores for closing. KB Toys notes that it expects to sell up to $122.5 million of inventory through the store-closing process.As a result of its restructuring and store closings, approximately 3,500 jobs will be eliminated from the current 12,000 positions. "Closing these stores is a major step in KB Toy's restructuring process," says Michael L. Glazer, CEO of the company. "These stores are underperforming and do not fit with KB Toy's strategic plans. Closing them allows us to reduce our corporate overhead and regional operating costs. Overall, this step greatly strengthens KB Toy's financial position and puts KB Toys in a position to compete more effectively in the future."