May 28, 2009, 12:00 AM

Toys ‘R’ Us purchases venerable toy retailer FAO Schwarz

Toys ‘R’ Us has bought FAO Schwarz, a multichannel retailer best known for its lavish toy emporium on Fifth Avenue in New York City. Toys ‘R’ Us says it will operate FAO Schwarz as a separate brand. The companies did not reveal a purchase price.

Online toy retailer Toys ‘R’ Us has purchased FAO Schwarz, a multichannel retailer best known for its lavish toy emporium on Fifth Avenue in New York City. Toys ‘R’ Us says it will operate FAO Schwarz as a separate brand. The companies did not reveal a purchase price.

"We have enormous respect for the FAO Schwarz brand and for the special place it holds in the hearts of children everywhere," says Jerry Storch, chairman and CEO of Toys ‘R’ Us Inc. "Building upon this storied tradition is a responsibility we take very seriously. We will work tirelessly to preserve the distinctiveness and integrity of the FAO Schwarz stores and brand as we grow the business and, indeed, take the brand to even greater heights."

FAO Schwarz has had financial troubles in recent years, filing for bankruptcy twice in 2003 before being purchased by an investment firm in 2004.

Toys ‘R’ Us, No. 39 in the Internet Retailer Top 500 Guide, will operate the FAO Schwarz e-commerce and catalog operations under a separate brand. The FAO Schwarz retail site has temporarily stopped accepting online purchases while it moves over to the Toys ‘R’ Us back-end systems, but a spokeswoman for Toys ‘R’ Us says that it will be up and running again shortly. Until then, she says customers can place orders over the phone.

Additionally, Toys ‘R’ Us says it will continue to operate the two FAO Schwarz retail stores, including the flagship location in New York City and a store at the Forum Shops at Caesars Palace in Las Vegas. Toys ’R ’Us will offer employment opportunities to FAO Schwarz associates in the New York and Las Vegas stores. All management, distribution and marketing operations will immediately begin to transition to Toys ‘R’ Us.

Earlier this year, Toys ‘R’ Us purchased the e-commerce properties of The Parent Company after The Parent Company filed for bankruptcy in late December. These properties included eToys.com, babyuniverse.com and ePregnancy.com. It also purchased this year the web address Toys.com, for $5.1 million, and toys.com now links to the ToysRUs.com web site.

Web sales for Toys ‘R’ Us totaled $500 million in 2008 according to Internet Retailer estimates. Both FAO Schwarz and Toys ‘R’ Us are privately held.

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