Toys R Us to Open FAO Schwarz Stores for Holiday

Toys R Us plans to open 10 FAO Schwarz pop-up stores for the holidays, giving new life to a brand it recently acquired that was down to just two locations.

The move is latest piece of the toy retailer's aggressive plan to gain market share in a weak economy. Toys R Us is also opening 600 Toys R Us pop-up stores and increasing the selection of its exclusive toys and its own "R" label toys.

"In a difficult economy, the smart thing to do is push forward," CEO Jerry Storch said in a meeting with the media on Wednesday.

Toys R Us, which bought the assets of the high-end retailer FAO Schwarz after it filed for bankruptcy protection in 2009, already has a separate area in all of its stores for FAO Schwarz-branded toys, including a smaller version of the piano featured in the movie "Big" for $79.99.

The new pop-up stores, two of which have already opened, will be at high-end malls such as Aventura Mall in Aventura, Fla. They will also offer the "Big" piano, a plush Zebra that retails for $154.99, Harry Potter toys and dress-up clothes, Madame Alexander dolls and other toys.

The stores are slated to close in January, but Storch said there is a possibility they could remain open.

Toys R Us has scooped up former competitors such as FAO Schwarz as well as Web site eToys.com and mall chain KBToys after they each filed for bankruptcy protection, done in by the recession and competition from mass merchants like Target and Wal-Mart Stores.
Toys R Us posted a loss in its most recent fiscal quarter, hindered by higher costs, but it has performed relatively well during the past two years as toys proved relatively recession-proof.

The bulk of toy retailers' profit is earned in the fourth quarter, one reason Toys R Us is being aggressive for the holidays.
"We're not projecting a dramatic increase over prior years. We just know Christmas will come," Storch said.