'WE'RE GOING TO SAVE THE TOY INDUSTRY': KB Toys owner plots return as age-old rival Toys R Us goes out of business

AP/Paul Warner

KB Toys went bankrupt in 2009. Now, the new of the brand rights is looking to bring it back.

• KB Toys, the defunct rival of Toys R Us, went bankrupt in 2009.
• Strategic Marks, which acquired the KB Toys trademark in 2016, is now plotting to revive the toy store.
• KB Toys' pop-up shops could come by this Christmas, with permanent mall stores potentially coming later.

As Toys R Us, the largest toy store chain in America, prepares to close up shop, an old rival could be reborn to take its place.

Strategic Marks, a company that specializes in reviving dead brands, has a plan to give new life to the KB Toys name.

According to CNN Money, Strategic Marks purchased the KB Toys brand from Bain Capital in 2016. Bain, along with Kohlberg Kravis Roberts and Vornado Realty Trust, invested $1.3 billion in a $6.6 billion leveraged buyout in 2005, which took Toys R Us private.

Toys R Us had purchased the rights to the KB Toys name in 2009, the same year it went bankrupt.

Strategic Marks is now in the process of reviving the brand, and those plans have now been accelerated in light of Toys R Us' struggles, according to CEO Ellia Kassoff.

KB Toys, he says, could be back as soon as the end of this year.

Kassoff initially announced his plans in a LinkedIn post with the headline: "WE'RE GOING TO SAVE THE TOY INDUSTRY!"

"Now, with the closing of [Toys R Us] so quickly, it caught us by surprise so we've spent the last few days with our team and leaders in the toy industry to figure out how we can accelerate the project," Kassoff wrote in a follow-up LinkedIn post.

KB Toys' return could start with pop-ups around the country during the holiday season, with permanent mall stores potentially following after that. Kassoff says he has already spoken with companies that specialize in pop-up-style holiday stores.

He said that e-commerce would also be a big part of the play, but he has not elaborated on those plans specifically.

"Many of you asked what our plans will be and all we can say is we spent the last six months working on a sustainable model to bring back KB Toys the right way so it can compete with not only the big box stores but online as well," Kassoff said on LinkedIn. "With [KB Toys], we had to also look at why they initially failed and to make sure those mistakes won't be made again."

Support from the toy industry has been "overwhelming," Kassoff said in the second LinkedIn post. Toy makers have reportedly been worried about the ramifications of losing a large nationwide buyer in Toys R Us, which accounted for between 20% and 40% of revenue for some brands.

Apart from sales coming directly from the chain, these toy brands would also be losing more than 700 showrooms around the US and Canada if all of Toys R Us' stores were to close.

"The largest toy manufacturers are extremely excited that we're coming back and one - very large - said they will do whatever they can do to make sure we're successful," Kassoff said in an email to Business Insider.

CNN Money reported that Kassoff has spoken with Hasbro, Mattel, and as many as 200 smaller toy manufacturers. Some of these smaller toy makers are in trouble, and according to Reuters, Toys R Us' liquidation plans could spell their doom.

Strategic Marks routinely purchases nostalgia-filled brand names and rights or revives abandoned trademarks, attempting to spin them out into new businesses. One of its most high-profile revivals was Hydrox, an Oreo-like cookie brand that actually beat Nabisco's version to the market in 1908. Strategic Marks relaunched the cookie in 2015.