Dominoes Toys in Leicester has made 18 of its 28 staff redundant this morning after it went into administration, reports the Leicester Mercury.
A buyer is now being sought for the troubled city centre business, which continues to trade. However, if a sale is not secured the business will close.
The award-winning family-owned company, founded 30 years ago, has lost in excess of £1m in the last couple of years.
Administrator Tyrone Courtman, a partner at accountancy firm Cooper Parry, said: “It’s a very, very sad day. Dominoes is an iconic name in Leicester.
Mr Courtman put the problems down to tough economic conditions and competition from supermarkets and online operators.
He said he was expecting it to be difficult to find a buyer for the company, based in High Street in the city.
“I see it being quite problematic given the problems on the high street,” he said. “I will be trying my best.”
Mr Courtman added: “You can imagine that the emotions running quite high in this situation. The trouble is if your costs are higher than your revenue it’s quite difficult to continue.”
Two years ago Dominoes Toys was named the best independent toy store in Britain at the Toy Industry Awards.