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Toys ‘R’ Us Sells FAO Schwarz To Toy Manufacturer

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More than a year after closing the iconic Manhattan FAO Schwarz store, Toys ‘R’ Us is selling off the brand to California-based toy manufacturer ThreeSixty Group, according to a report from Fortune. The terms of the transaction were not disclosed.  

Toys ‘R’ Us, which initially purchased FAO Schwarz in 2009, also recently closed its own Times Square-based flagship due to high costs. The retailer has moved away from operating massive retail locations that aren’t profitable, instead opting to focus on opening stores with smaller footprints. The retailer now has $1 billion in total liquidity, and has shown interest in focusing more on experiences, dedicating in-store specialty shops to hot-selling items such as Mattel’s American Girl collection and opening up “drone zones” where shoppers can test out drones.

FAO Schwarz Toys Expected To Hit Stores By Fall 2017

ThreeSixty will design a new FAO Schwarz-branded toy collection that is expected to be available at the company’s partner retailers by Fall 2017. Until then, FAO Schwarz merchandise will continue to be available online and at Toys ‘R’ Us stores across the U.S., according to the Fortune report.

But aside from the toy collection, there are no concrete plans for the future of the FAO Schwarz brand. ThreeSixty may outline a potential strategy after it presents its line of goods at upcoming industry toy fairs, including New York’s own Toy Fair, which will be held in February 2017. Kirk McLean, Co-Founder of ThreeSixty Group, has speculated that the brand could possibly have a brick-and-mortar future.

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“We think it would continue to speak to the legacy of the brand to have a flagship location or two,” said McLean in an interview with Fortune.

Under Armour will open up shop in the former FAO Schwarz location as early as 2018. The athleticwear brand’s success at the location may reveal whether the FAO Schwarz brand itself was the problem, or whether the store itself simply couldn’t hold up. While the 53,000 square-foot location carries plenty of space for both goods and experiences to coexist, it is still yet to be determined whether the costs to keep the store operating are affordable in today’s retail environment.

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