| Type | Subsidiary |
|---|---|
| Industry | Retail |
| Founded | 1862 |
| Headquarters | General Motors Building New York, New York |
| Number of locations | 1 |
| Products | Toys,Clothing |
| Parent | Toys "R" Us |
| Website | fao.com |
FAO Schwarz is the name of an upscale toy retailer in New York City, located in the General Motors Building on 5th Avenue. It is the oldest operating toy retailer in North America, and is often considered as the New York equivalent of Hamleys in London.
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FAO Schwarz was founded in 1862 under the name Toy Bazaar by German immigrant Frederick August Otto Schwarz, in Baltimore, where he and his brothers retailed toys from a fancy-goods store. Additional locations of Toy Bazaar followed in Philadelphia and Boston.
In 1870, Schwarz opened a New York City location as the "Schwarz Toy Bazaar" which moved to 42 E. 14th Street in Union Square in 1880 and operated at that location until April 28, 1897, when it took over two vacant store locations at 39 and 41 West 23rd Street. By then, the New York Times described Schwarz as "the largest dealer in toys in this city." [1]
Each November, the Schwarz Toy Bazaar held an exhibition of toys that would be available for the Christmas season, which in 1883 was described as the "14th Annual Exhibition" [2] and it was during this period that the store began hosting the appearance of "Santa Claus." In 1896, Schwarz proclaimed the store as the "Original Santa Claus Headquarters" in New York.[3]
In 1889, Schwarz added his initials to his newspaper advertising, branding the store at that time as simply "F.A.O. Schwarz," although the "Toy Bazaar" identifier continued until the move to West 23rd Street.[1]
Noted New York architect Stanford White leased a loft apartment over the store, and his association there with an under age Evelyn Nesbit led to his murder at the hands of millionaire Harry Thaw at Madison Square Garden June 25, 1906.[4]
In 1931, the New York location was moved to the southeast corner of 58th Street and Fifth Avenue (the site currently occupied by the Bergdorf Goodman Men's store). The toy store became well-known for its unique plush toys and memorable environment that was among the pioneers of "entertainment retail," the philosophy that a store should be an experience for its customers.
In 1963, the Schwarz family sold the business to Parents magazine. The business was subsequently sold to W.R. Grace in 1970, and then to toy retailer Franz Carl Weber International of Zurich, Switzerland in 1974. As an absentee owner, Weber sought strategic alternatives in order to boost business. He approached venture capitalist Alan Patricof for a $1 million investment. Patricof concluded that the favorable long-term lease that Weber had on the famed Fifth Avenue retail store was significantly below market; however, there was no right to sublet or otherwise capture the value in the lease itself which far exceeded the value of the company as an operating company. Patricof referred Weber to his brother-in-law Craig Hatkoff, a real estate investment banker at Chemical Realty Corporation who concluded that Weber should try to sell the lease back to the landlord. At the meeting between Hatkoff and the building owner Christiana Companies, the landlord actually made an offer to buy the entire company for $4 million. FAO Schwarz was thus sold to the Christiana Companies in 1986, and the business was sold shortly afterward to Christiana Companies CEO Peter Harris and investor Peter C. Morse.
In 1986, the New York Store was moved across 58th Street to its current location in the General Motors Building. FAO Schwarz was acquired by Dutch retail group NV Koninklijke Bijenkorf Beheer in 1990; Morse left the company, but Harris remained as CEO until 1992, when he was replaced by John Eyler. In 1998, KBB was acquired by Vendex NV, another Dutch retailer. Throughout the 1990s, FAO Schwarz opened new stores; the chain's peak occurred in 2000 when a total of 42 stores were located throughout the United States under KBB.
In addition to FAO Schwarz toy stores, starting in 1996 standalone candy stores branded as "FAO Schweetz" were opened in Miami, at the Source Mall in Long Island, NY, at Old Orchard Shopping Center in Skokie, Illinois, Uptown Houston in Houston, Texas, and at Water Tower Place in Chicago.
Shortly after its business peak in 2000, the company faced financial failure. Vendex put the 42-store chain up for sale. In 2001, The Right Start Company bought 23 of the 42 stores from Vendex. The other nineteen unsold stores were immediately closed. In 2002 the Right Start Inc. changed its corporate name to FAO Inc. operating stores under The Right Start, Zany Brainy and FAO Schwarz names.[5] In January 2003, FAO Inc. filed for bankruptcy,[6] emerging from bankruptcy in April 2003. The company filed for bankruptcy a second time in December 2003.[7] The Fifth Avenue store was closed in January 2004.[8]
In February 2004, investment firm D. E. Shaw & Co., L.P., acquired the FAO Schwarz brand, the FAO Schwarz stores in New York and Las Vegas, and FAO Schwarz's catalog and internet business. The New York and Las Vegas stores were reopened on Thanksgiving Day 2004.
In November 2007, FAO Schwarz acquired premium children's clothing company Best & Co., which had plans to expand [1], but the company ceased business in 2009.
On September 27, 2008, a FAO Schwarz opened up at the Macy's Illinois flagship store on State Street in Chicago. It was the first FAO Schwarz located inside a Macy's. Over 250 locations were expected to follow in 2008 and 2009, though most never opened due to the economic crash of 2008 and the chain's sale in 2009.[9] In 2008 FAO Schwarz contracted with Boston Interactive to create a new look for FAO's web site design to appeal to the new generation of online shoppers.
In May 2009 Toys "R" Us, Inc., the largest toy chain in the United States, acquired FAO Schwarz for an undisclosed price. As a result of the acquisition, Macy's closed the FAO Schwarz shops in its stores. Toys "R" Us planned to continue operating FAO Schwarz's retail store in New York and another in Las Vegas under the same name, along with the company's web site and catalog businesses.[10] However, as a result of the economic downturn, the Las Vegas store was closed on January 23, 2010, just before its lease expired, leaving just the New York City store in the GM Building.[11]
The New York City store, located in the General Motors Building at Fifth Avenue and 58th Street in Manhattan, is currently FAO Schwarz's only brick-and-mortar store location and a famous destination in the city. The store was redesigned by architect David Rockwell of The Rockwell Group in collaboration with Paul Gregory of Focus Lighting in 2004. The Fifth Avenue flagship store now features a large open front area and award-winning lighting[12] which includes almost 80,000 LED lights mounted on the ceiling above the main atrium space.
The store contains many unique mini stores featuring create-your-own Barbie, Muppet Whatnot Workshop, Barefoot Books boutique, Madame Alexander doll factory, and a pottery studio.
The New York store was featured in the 1988 Tom Hanks film Big, in which Hanks and Robert Loggia danced "Heart & Soul" and "Chopsticks" on the store's large floor piano. Many people travel from around the world to take a stroll on the now famous "Big" piano.