Specialty toy retailer FAO Inc. on Friday said it agreed to sell parts of its FAO Schwarz business, including its flagship store on New York's Fifth Avenue and its Las Vegas store, to a unit of D.E. Shaw Laminar Portfolios LLC for $20 million.
FAO, which is based in King of Prussia, Pennsylvania, said its sale to VGACS Acquisition Inc., which is subject to adjustments, includes FAO Schwarz's Internet and catalog businesses, intellectual property rights, its clock towers and other fixtures.
The company filed for Chapter 11 bankruptcy reorganization on Dec. 4, its second such filing this year, citing dismal holiday sales.
FAO said VGACS will assume FAO's rights under its New York and Las Vegas store leases. FAO said it will sell these stores' inventory, and that VGACS plans to remodel the stores and reopen them prior to the summer of 2004.
FAO did not say how it might dispose of its other 13 FAO Schwarz stores. A spokesman for the company did not immediately return a call seeking comment.
FAO's second bankruptcy filing came as low toy prices at discounters such as Wal-Mart Stores Inc. and Target Corp. and big toy retailers such as Toys R Us Inc. made it more difficult for smaller retailers, including rival privately held KB Toys, to compete.