NEW YORK — Geoffrey the Giraffe became a knight in shining armor for toy retailer FAO Schwarz late Wednesday, as Toys R Us said it acquired the troubled high-end retailer, which has struggled for years through bankruptcies amid tough competition from discount stores.
Analysts said privately held FAO Schwarz was in danger of closing if a buyer did not materialize. Meanwhile, privately held Toys R Us — the largest U.S. toy retailer — will get an opportunity to work with smaller toy vendors, cut costs and operate a marquee store on Fifth Avenue.
Toy retailers have been increasingly squeezed by discounters such as Wal-Mart Stores Inc. and Target Corp. as well as online retailers. The consumer-spending cutback and recession have added to the pressure, winnowing the weaker players.
KB Toys, Toys R Us’s only major direct competitor, did not even make it to the holidays, filing for bankruptcy protection in December and liquidating its stores.
