The Rise and Fall and (Maybe) Rise of FAO Schwarz: Toystore of the Rich and Famous

The Store
Since 1876, FAO Schwarz, the toy store of the rich and famous, has been a major tourist attraction, particularly for families visiting New York City. In more recent years, the store was popularized in a scene in the 1988 film "Big", where actors Tom Hanks and Robert Loggia danced on a giant piano keyboard toy.

Some of the priciest and most unusual items sold at FAO Schwarz have included the giant piano keyboard from "Big" (worth $250,000); a life-size LEGO sculpture of NBA star Jason Kidd for $15,000; a $30,000 gas-powered Jeep-style vehicle for children aged 8 and over; Swarovski crystal-studded Pez dispensers; and an overnight kid's sleepover birthday party in the store, complete with ice cream and a gift scavenger hunt (starting at about $25,000).

The Fall
Ever since the Schwarz family sold the store to Parents Magazine in 1963, the FAO Schwarz Company's economic history became extremely rocky. In 1970, Parents sold the company to giant American conglomerate W.R. Grace, who sold it to a Swiss conglomerate four years later, who sold it to another American conglomerate in 1986, who then sold it to a Dutch company in 1990. Somewhere during these takeovers, FAO Schwarz became a brand name with two more big stores opening in Las Vegas and Chicago. Also, smaller stores bearing the FAO Schwarz brand name began showing up in malls and inside mall stores all over the country.

In 2002, FAO Schwarz filed for bankruptcy. In 2003, they filed for bankruptcy a second time.

The Rise
In 2004, D.E. Shaw, a super-secretive Wall Street hedge fund, acquired FAO Schwarz and its brand name. While most hedge funds have become Wall Street villains due to the recent subprime mortgage debacle, D.E. Shaw has mostly been a success story.

With Shaw came a new savvy and innovative CEO, Ed Schmults (yes, that's his name). As a result of his management, most of the mall stores were shut down. And the New York flagship store was reborn along with the two other big stores in Chicago and at Las Vegas's Caesar's Palace.

New features were also added within the flagship and other remaining FAO Schwarz stores, most notably exclusive in-store boutiques, such as a Harry Potter shop, a LEGO shop, and a Newborn Adoption Center where original Lee Middleton dolls can be "adopted." Other recent features are the FAO Schwarz gift cards available in denominations from $25 to $10,000 along with the Special FAO Schwarz Signature Gift Cards are in amounts from $50,000 to $100,000.

As an ongoing Manhattan store attraction, Piano Dancers, perform live on the "Big" piano keyboard.