Toys 'R' Us acquires FAO Schwarz, Macy's boutiques to end

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Toys“R”Us Inc. has acquired upscale toy retailer FAO Schwarz from investment firm D.E. Shaw Group.

Under the terms of the deal, FAO Schwarz's arrangement with Macy's for  toy boutiques inside up to 300 Macy's stores will end in November of this year, according to a company spokesperson. That arrangement was announced last fall.

D.E. Shaw picked up FAO Schwarz in 2004 after the retailer had a difficult year in 2003, going through bankruptcy twice in 12 months.

For Toys “R” Us, the deal continues an expansion strategy that saw it bolster its online offerings with the acquisition of eToys.com, babyuniverse.com, Toys.com and ePregnancy.com earlier this year.

FAO Schwarz will allow Toys “R” Us to grow market share in the toy specialty market “and draw upon the unique strengths of both brands in developing quality products that differentiate us from our mass market competitors,” said Jerry Storch, chairman and CEO at Toys “R” Us, in a statement.

“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,” Storch continued.

Toys “R” Us will continue to operate the two FAO Schwarz retail stores, including the flagship location in New York City and a store in Las Vegas. In addition, the company will operate the FAO Schwarz e-commerce and catalog operations. All merchandising, management, distribution and marketing operations will immediately begin to transition to Toys “R” Us.
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