The brightest and shiniest plaything in toyland, FAO Schwarz, has been purchased by the Netherlands's most glittering department store chain.
NV Koninklijke Bijenkorf Beheer (KBB) said yesterday it bought the legendary New York-based toy store chain for an undisclosed amount from a private U.S. investor group, which has owned it for five years and is credited by many retail experts with reinvigorating the store after years of lackluster performance. It marks the sixth time FAO Schwarz has been sold in 20 years.
After losing its status as one of the nation's largest toy retailers, the rejuvenated FAO Schwarz now has large stores in New York City and San Francisco, 15 smaller stores nationwide and a catalogue business. There are three stores in the Washington area -- in Georgetown, Tysons Corner and White Flint.
The 128-year-old FAO Schwarz became famous worldwide for its toy selection, helped along by its Christmastime windows full of sugarplum fairies and elaborate electric train sets at the flagship store on Fifth Avenue in Manhattan. That store -- a place that has sent children of all ages into dreamy reveries -- is a tourist attraction during the holidays.
"We've returned FAO Schwarz to its top position in the industry over the last few years and we're a hot business ready to grow," said Peter L. Harris, FAO Schwarz president and chief executive. He said much of the present management team will stay with the company after the acquisition.
After being held by the Schwarz family for a century, the store was sold in 1963 and had a series of owners over the next two decades. The chain suffered under many changes, gettingpricey and stodgy -- it even declined to carry the popular Cabbage Patch Kids in the early 1980s because the doll did not fit the store's image.
Harris and others acquired FAO Schwarz in 1985 and quickly began to pump more money in and adjust the product mix to include more affordable toys. The chain, which was losing money, became profitable again. FAO Schwarz is estimating 1990 sales of more than $50 million.
"We are not a discounter, but we've tried now to stock great toys over a wide range of prices," said Harris. "Someone can look at the $6,000 stuffed gorilla and buy a $25 version and still feel like they are taking home the same emotions and feelings of FAO Schwarz."
Retail observers expect the 1,200-store, publicly held Dutch company to use the store's fame to expand its U.S. and international operations.
KBB's 1989 sales totaled about $1.67 billion, with profits of $43 million. Its jewel is the Bijenkorf -- beehive in Dutch -- department store chain, purveyor of upscale merchandise, including elaborate toys like those of FAO Schwarz, and its flagship store is a central Amsterdam landmark. The retailer also owns the low-priced HEMA chain, the do-it-yourself store Praxis, M&S Mode, a women's fashion retail chain and other small chains.
"FAO Schwarz is the preeminent retailer of fine toys in the world and we are committed to building on FAO's tradition of excellence," said KBB Chairman Arie Maas in a prepared statement. FAO Schwarz is its first acquisition in the United States.