Toys “R” Us Buys FAO Schwarz

schwarz

Toys “R” Us purchased FAO Schwarz today for an undisclosed amount. Bloomberg has more:

Toys “R” Us plans to continue operating FAO Schwarz’s two retail stores in New York and Las Vegas under the same name, along with the company’s Web site and catalog businesses, Toys “R” Us said late yesterday in a statement.

The deal combines two retailers that have faced increased competition from the Internet and discount chains (ed: especially Wal-Mart) 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.

The New York Times Dealbook puts the purchase in context:

Like many retailers, Toys “R” Us is using the economic downturn to take market share. This year, Toys “R” Us bought eToys.com, babyuniverse.com and the resource site ePregnancy.com.

The acquisitions help the company dominate the toy segment, leaving Wal-Mart and Target as its main competitors.

Toys “R” Us underscored that it would operate all the F. A. O. Schwarz businesses under the F. A. O. Schwarz name and maintain the hands-on shopping experience at the stores.

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