There is one other F. A. O. Schwarz toy store, at Caesars Palace in Las Vegas, where shoppers are greeted by an animated Trojan horse. Toys “R” Us is buying both stores, as well as the company’s Web site and catalog operations. F. A. O. Schwarz stores inside Macy’s will be phased out by November.  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.  Mr. Storch said he had no immediate plans to build any additional F. A. O. Schwarz stores. At the moment, he is focused on “making sure that the customers from these stores feel like they’re even better than they’ve been.”  Sean McGowan, an analyst with Needham & Company, said F. A. O. Schwarz was once a chain of dozens of stores, “but it’s important for most people to be reminded how small F. A. O. has become.”  Toys “R” Us is carrying billions of dollars of debt, though Mr. McGowan pointed out that the acquisition of F. A. O. Schwarz “certainly shows some strength on Toys ‘R’ Us’s part.”  He said the acquisition would probably not cost the company much but could help raise its profile. “The association with the premier toy brand in the world is probably a plus,” he said.  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.  “We feel that New York is a very important market,” Mr. Storch said. F. A. O. Schwarz would also help it serve an international clientele, he said.  F. A. O. Schwarz’s chief executive, Barry Erdos, will not remain with the company after the sale. Toys “R” Us, which has more than 1,500 stores worldwide, said it would offer positions to all of the 300 employees at the New York and Las Vegas F. A. O. Schwarz locations.  F. A. O. Schwarz was bought by D. E. Shaw & Company in 2004. Toys “R” Us operated as a public company from 1978 until July 2005. At that time, an investment group consisting of affiliates of Bain Capital, Kohlberg Kravis Roberts and Vornado Realty Trust acquired the company for $6.6 billion.
The retailing chain says it will keep the name and hands-on shopping experience of F.A.O. Schwarz, an iconic New York store.