Tech & Biz

Toys 'R' Us buys out FAO Schwarz

by Blaine Metzgar | May 28, 2009 at 09:32 am

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Toys 'R' Us Inc. has bought out FAO Schwaz, the high end toy store brought to fame in the 1988 Tom Hanks film Big. Toys 'R' Us will continue to operate FAO Schwarz's flagship stores on Fifth Avenue in New York City and Las Vegas.

The deal was announced late on Wednesday, May 27, although the purchase price was not disclosed.

The deal combines two closely held retailers that have faced increased competition from the Internet and discount chains during the recession. U.S. retail sales of toys generated $21.6 billion in 2008, a 3 percent drop from 2007, according to researcher NPD Group Inc. Mass merchant, discount and online retailers saw the most modest declines, NPD said, as consumers looked for ways to buy non-necessities at the lowest cost.

FAO Schwarz began in 1862 and had established its brand as a high end toy chain but in recent years the company struggled through bancruptcies.

In a statement regarding the acquirement Jerry Storch, the chief executive of Toys 'R' Us said,