FAO Schwarz Sold To Toys“R”Us
The Manhattan toy store has undergone a significant brand repositioning effort.
May 28, 2009
FAO Schwarz, the 147-year-old Manhattan toy store has been sold to a strategic buyer… again. Toys“R”Us, Inc., the Wayne, New Jersey-based toy retailer has acquired FAO Schwarz for an undisclosed price.
In February 2009, the buyer purchased an e-commerce site, eToys.com from The Parent Company. As part of the sale, Toys"R"Us also acquired BabyUniverse.com and ePregnancy.com.
FAO Schwarz has struggled to maintain profitability and has changed ownership numerous times since the Schwarz family exited the business in 1963. The company was acquired at that time by Parents magazine.
Since that time, the retailer rotated through a furious round of owners, including W. R. Grace in 1970; Zurich, Switzerland-based Franz Carl Weber International in 1974; Christiana Companies in 1986; the Dutch retailer NV Koninklijke Bijenkorf Beheer in 1990; then Vendex NV in 1998.
FAO Schwarz was later sold to The Right Start, Inc. in November 2001. The Right Start also owned children’s educational toy maker Zany Brainy. Shortly thereafter, the New York toy store company filed for Chapter 11 bankruptcy protection in 2002, then again filed for bankruptcy in 2003.
Following this rocky history, hedge fund D.E. Shaw bought the assets of FAO Schwarz in 2004 for $41 million, and retained ownership until recently.
Under D. E. Shaw’s ownership, FAO Schwarz stores in New York and Las Vegas reopened in November 2004. In November 2007, FAO Schwarz purchased Best & Co., a children's clothing company.
A year ago, the toy company signed an agreement with Macy's to launch smaller FAO Schwarz locations within Macy's stores. Of the 685 planned sites, 260 were opened. It is now planned that the locations will be gradually phased out.
In March, the toy retailer hired former Build a Bear Workshop Inc. president and chief operating officer Barry Erdos as the new chief executive of FAO Schwarz. Erdos, who was previously the president, chief operating officer and acting chief financial officer at Bluefly.com, will not remain at FAO Schwarz after the sale to Toys “R” Us.
Throughout the most recent period, the company attempted to reposition itself as an operation with numerous smaller chain throughout the country, then as a catalogue retailer.
Calls placed to Toys"R"Us and FAO Schwartz were not returned by press time.
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