Macy's to Open In-Store FAO Schwarz Boutiques

New York City Macy's Inc. has reached an agreement with FAO Schwarz to open branded specialty toy shops in about 685 Macy's locations during the next two years.

Up to 275 Macy's stores will have FAO Schwarz-operated toy stores in fall 2008, the companies said, in time for the key holiday shopping season.

Terry Lundgren, Macy's chief executive said the deal with FAO Schwarz would "drive store traffic, particularly to our children's departments."

This fall, FAO Schwarz shops at a size of between 1,000 sq. ft. and 3,500 sq. ft. will be launched at 75 Macy's stores across the United States, the companies said.

About 200 of the department store operator's locations will have smaller FAO Schwarz toy departments, at a size of 200 to 300 sq. ft. The new boutiques will carry the toy retailer's private-label toys and other select brands, the companies said in a statement.

The companies also plan for FAO Schwarz products to be sold on Macy's Web site.