After I wrote about an apparent cease-fire in the toy wars, a Foolish reader informed me that the rumors of FAO Schwarz's out-and-out demise have been just a tad bit exaggerated. Even with FAO Schwarz's slight reentry into the market, it seems it won't be much of problem for the reigning heavyweights in toys.
FAO Schwarz will reopen its flagship Manhattan store on Thanksgiving, and it plans to reopen its store in Las Vegas. But that's it -- a far cry from the many retail stores it once operated, which included the Zany Brainy and Right Start outlets. FAO Schwarz will also circulate a catalog for the holidays (which I requested, curiously, about a month ago, and received last week).
This year promises to be a bit different than all the bloodletting of the last holiday season. With FAO Schwarz just a ghost of the retail presence it used to be, and KB Toys leading a pared-down existence, giants such as Wal-Mart (NYSE:WMT) and Toys "R" Us (NYSE:TOY) seem like shoo-ins to get a lion's share of the toy business. (As for online toys, Toys "R" Us still has a deal with Amazon.com (NASDAQ:AMZN), despite their domestic squabbles this year.)
Indeed, those shoppers looking for toys for tots such as, for example, Mattel's (NYSE:MAT) Barbie or Hasbro's (NYSE:HAS) G.I. Joe will likely still carry on their searches at the Wal-Marts, Targets (NYSE:TGT), and Toys "R" Us outlets in their neighborhoods. FAO Schwarz won't be presenting a huge competitive risk.
Why's that? Because FAO Schwartz is adhering to its heritage and doing what it probably should have always done -- solely addressing the luxury niche through just two storefronts and a catalog. If you're looking for, say, a $9,000 Wild Zebra Rocking Horse or a $30,000 La Petite Maison Custom Playhouse for your favorite kid, FAO Schwartz is the place for you. (Hmm, OK, uh... that's insane! If you'd spend that on your little sweetheart, to each his or her own, I guess, but don't let on to the rational people on our Living Below Your Means board.)
At any rate, investors will be looking forward to seeing how it goes with toys this holiday season, considering that Toys "R" Us in particular has had its share of crises and has even been rumored to be considering a sale of its core toy business. In the meantime, happy holidays, and happy bargain hunting on Black Friday!
Amazon.com and Hasbro are Motley Fool Stock Advisor picks, and Mattel is a Motley Fool Inside Value pick. Who needs a $9,000 rocking horse? Fools like long-term investing ideas from our suite of newsletters, which nobody ever outgrows.
Alyce Lomax does not own shares of any of the companies mentioned.
