By  on November 14, 2007

Luxury children's brands FAO Schwarz and Best & Co. are uniting, as the toy retailer acquired the children's wear store for an undisclosed sum to expand into a lifestyle brand.

FAO Schwarz plans to at least double the size of Best & Co. in the next few years by adding selective wholesale distribution to high-end domestic and international doors, as well as quickly growing its catalogue and Web businesses.

"This is the alignment of two great New York brands with a great history and a real insistence on quality," said Ed Schmults, chief executive officer of the toy store. "FAO Schwarz represents the standard of excellence in a child's life. We found that 100 million upper-income Americans recognize the FAO Schwarz brand and were very open to buying it in other aspects than toys, so we've been looking into how we can expand our footprint."

He declined to disclose Best & Co.'s volume.

The joining of the brands creates an opportunity for toys in Best & Co. and clothes in FAO Schwarz, with a segmentation strategy positioning Best & Co. in the luxury market and FAO Schwarz at a better price point with broader distribution. "We plan to craft two overlapping but distinct brands," Schmults said.

Susie Hilfiger, who reestablished Best & Co. a decade ago and designs the namesake collection, will remain creative director.

"I have a whole toy bag full of dreams for Best & Co.," Hilfiger said. "My dream was always to build Best & Co. to a global brand, and I took it to the highest level I could — I needed a partner to expand it worldwide, and I chose FAO Schwarz because it's a natural fit. We have such a similar heritage and share the same vision of today's world: offering quality luxury products for children in a unique magical environment."

Both luxury children's companies have more than a century of history: Albert Best founded Best & Co in 1879, and Frederick August Otto Schwarz founded FAO Schwarz in 1862.

In business along the East Coast until 1971, Best & Co. was relaunched in 1997 by Hilfiger. Today it has a flagship in Greenwich, Conn., and a boutique in Bergdorf Goodman, which carry the Best & Co. collection and other high-end children's clothing and gift collections. Beginning with this holiday season, the Greenwich store will carry select items from FAO Schwarz's private label toy collection.At its peak, FAO Schwarz had 40 stores, but financial troubles hit and, in 2001, it closed 18 stores and sold the rest to The Right Start Co., which in turn filed for Chapter 11, shuttering the remainder of the stores. In February 2004, hedge fund D.E. Shaw & Co. LP bought the Manhattan and Las Vegas stores, as well as FAO Schwarz's catalogue and Internet businesses. Both stores reopened on Thanksgiving Day 2004, and a store within the Macy's Chicago flagship just debuted. The company reported that comps in the New York store are up 26 percent this year, against 20 percent gains last year.

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