Macy’s and FAO Schwarz Sign Exclusive Toy Store Agreement

Macy’s, Inc. and FAO Schwarz today announced they have signed an exclusive agreement under which FAO Schwarz will open FAO-operated toy stores in up to 275 Macy’s stores in fall 2008. FAO Schwarz stores are planned to expand into a total of approximately 685 Macy’s stores over the next two years.

Under the agreement, FAO Schwarz has named Macy’s the exclusive U.S. retail store host of FAO Schwarz departments, and FAO Schwarz will be the exclusive toy department in Macy’s stores. FAO Schwarz continues to independently own and operate its own stores including the Fifth Avenue Flagship store in the heart of New York City, its location in the Forum Shops at Caesar’s Palace, Las Vegas and its website, FAO.com.

In fall 2008, full-size FAO Schwarz shops of between 1,000 and 3,500 square feet will open in approximately 75 Macy’s locations across the country. Another approximately 200 Macy’s stores will host smaller FAO Schwarz departments of between 200 and 300 square feet. Plans also call for FAO Schwarz products to be sold on macys.com.

The FAO Schwarz assortment at Macy’s will feature its own private label collection that is exclusive to Macy’s and FAO Schwarz stores in addition to the select group of brands that have made FAO famous for the last 146 years. The unique assortment is driven by the brand’s core values of providing quality toys that spark imaginative play and are produced with consideration for the environment. The FAO Schwarz store-within-a-store concept was tested successfully in fall 2007 at Macy’s on State Street in Chicago.

“This is an outstanding partnership that will bring toys back to Macy’s in an exciting and unique way,” said Terry J. Lundgren, chairman, president and chief executive officer of Macy’s, Inc. “FAO Schwarz is the world’s most famous toy retailer with interesting and distinctive products that appeal to our customers and will drive store traffic, particularly to our children’s departments. Following agreements with great names such as Martha Stewart, Donald Trump, Tommy Hilfiger, e-Spot electronics and Lush Cosmetics, this is the latest example of an exclusive partnership with a leading brand that differentiates the merchandise assortments at Macy’s.”

“Macy’s is the perfect partner to bring the FAO Schwarz experience back to local communities. Our two brands have a combined history of 296 years of bringing joy and retail magic to consumers,” said Edward Schmults, chief executive officer of FAO Schwarz. “I am thrilled that, through Macy’s, we will be able to offer the FAO Schwarz products to every American family.”