FAO, Saks in Retail Deal

Cataloger/retailer FAO has signed a letter of intent to sell Birmingham, AL-based retailer Saks a minority stake in the company. As part of the arrangement, multichain retailer Saks would operated licensed FAO Schwarz toy departments in most of its 245 department stores. Saks would also gain a seat on the board of FAO, which filed for Chapter 11 bankruptcy protection on Jan. 13. The companies are exploring other joint marketing initiatives as well, such as baby gift registries.

In other FAO news, the King of Prussia, PA-based company, which operates Right Start and Zany Brainy in addition to FAO Schwarz, is scheduled to appear in bankruptcy court on Feb. 28. At the time the court will determine if the company can use the cash collateral of secured lenders to fund operations.

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