FAO Schwarz Buys Best & Co.

Upscale toy merchant FAO Schwarz has acquired Best & Co., a marketer of luxury children’s apparel and accessories. Terms of the deal were not disclosed.

FAO Schwarz CEO Ed Schmults said in a release that FAO plans to expand the Best & Co. brand through selective wholesale and international distribution. The company will also try to build Best & Co.’s brand recognition and sales by emphasizing its catalog and Web channels.

Select items from FAO Schwarz’s private label toy collection will be available in Best & Co.’s Greenwich, CT, flagship store for the holiday season. Best also has a boutique in Bergdorf Goodman in New York.

Susie Hilfiger, the wife of designer Tommy Hilfiger, bought an existing children’s boutique in 1987 and renamed it Best & Co. after an upscale New York-based department store that folded in 1971. It sells items such as $350 blazers and $88 argyle sweater vests for boys, and for girls, $138 Lucy Sykes silk blouses and $98 Mary Jane shoes.

FAO Schwarz is backed by investment and technology private equity firm D.E. Shaw Group, which also owns eToys Direct. D.E. Shaw bought FAO out of bankruptcy in 2004 from its parent company, baby products merchant The Right Start.

Stuart Rose, managing director for investment bank Tully and Holland, says FAO Schwarz has “come a long way since their bankruptcy,” and has made a smart, strategic play with this deal.

It’s also a good way for FAO to leverage assets to hit new markets drive value, Rose notes. FAO Schwarz and Best & Co. have the same target markets: upscale parents and grandparents. “If you can sell them clothes in addition to toys, products that probably don’t cannibalize one another, then you take more wallet share of the same customer.”

But David Solomon, co-CEO at investment bank Goldsmith Agio Helms/Lazard Middle Market, says he isn’t sure why FAO Schwarz would want to buy an upscale children’s boutique. Maybe FAO is considering a second retail concept that would combine both merchants’ goods, he notes.
Or it could also turn Best & Co. into its own wholesale brand, “which would provide it a channel for higher-end offerings,” Solomon says.

Partner Content

The Gift of Wow: Preparing your store for the holiday season - Netsuite
Being prepared for the holiday rush used to mean stocking shelves and making sure your associates were ready for the long hours. But the digital revolution has changed everything, most importantly, customer expectations. Retailers with a physical store presence should be asking themselves—what am I doing to wow the customer?
3 Critical Components to Achieving the Perfect Order - NetSuite
Explore the 3 critical components to delivering the perfect order.
Streamlining Unified Commerce Complexity - NetSuite
Explore how consolidating multiple systems through a cloud-based commerce platform provides a seamless experience for both you, and your customer.
Strategies for Maximizing Mobile Point-of-Sale Technology - NetSuite
Learn the top five innovative ways to utilize your mobile POS technology to drive customer engagement, increase sales and elevate your brand.