The company filed for bankruptcy protection in January. KB Toys then closed 389 stores between February and May and an additional 38 from May to August. The company now operates 819 units in the US, Guam and Puerto Rico.

"These store closings represent a significant element of KB Toys plan of reorganization and will not hinder our holiday operations," says Michael L. Glazer, the company's president and CEO. "We remain confident that KB Toys will emerge from this reorganization in a stronger position to compete more effectively in the marketplace." The company expects to emerge from bankruptcy early next year.

KB Toys is not the only toy retailer facing challenges from discounters like Wal-Mart. Earlier this year Toys 'R' Us closed all of its 146 Kids 'R' Us stores and its 36 Imaginarium educational stores. In August company officials said they might seek to sell their global toy business.