Toys 'R' Us sold its iconic FAO Schwarz toy unit to ThreeSixty Group, a company that designs and sells consumer products including toys and home goods, for an undisclosed amount, the companies said Tuesday.
ThreeSixty Group, founded in Southern California as “MerchSource” in 1999, designs, sources and distributes consumer products under a portfolio of owned and licensed brands, including Blue Hat Toy Company, Sharper Image, Black Series, Discovery Kids, Smithsonian and Animal Planet.
FAO Schwarz products will remain available online and at Toys 'R' Us locations until the fall of 2017, when they will transition to "select retailers."
Famous for its store’s floor piano, human toy soldiers and intricate toy trains, FAO Schwarz was founded in 1862 and became known for its Fifth Avenue store in the General Motors Building in Manhattan, where rents are among the highest in the world. Toys 'R' Us initially bought FAO Schwarz in 2009, but last year the toy retailer shuttered the iconic 45,000-square-foot, three-level store flagship Midtown store to save money. (That store is now an Under Armour location.)
FAO Schwarz has gone through several owners, culminating in this sale by Toys 'R' Us, and ThreeSixty Group could actually help its brand if it can develop a collection that is able to capture children’s imaginations. Such an effort would be helped by the strength of toy sales these days and the need for differentiated merchandise.
With this purchase, ThreeSixty Group says it plans to create an FAO Schwarz-branded toy collection that will draw on the over-the-top store experience tourists once flocked to Fifth Avenue to see. Kirk McLean, co-founder of ThreeSixty Group, said the company aims to keep the tradition of FAO Schwarz alive. "We are investing heavily in this brand and believe there is a tremendous opportunity to build upon the heritage experience and nostalgia of FAO Schwarz," he said in a press release.
ThreeSixty Group provides “curated merchandise programs” to major retailers, and its products can be found in some 70,000 retail stores. In 2015, ThreeSixty Group received a majority investment from private equity firm AEA Investors.