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FAO Schwarz CEO: Quality Is Our Future

FAO Schwarz is celebrating a successful turnaround and it’s welcome news for this once troubled retailer. But, how does a niche toy seller, with only two stores, run “neck-in-neck” with giants such as Geoffrey The Giraffe? CNBC’s Maria Bartiromo found out from FAO Schwarz CEO Ed Schmults.

"The power of the (FAO) brand is strong - 52 million Americans have had a FAO Schwarz experience. We try to maximize that - we want families to come in and share the beauty of our stores and our high quality items - ones that can be passed down from generation to generation."

"Our business is very strong in stores and also on-line," said Schmults. "Internet business is up 60% and store growth is 20% since last Spring, and this is only our first step."

Maria Bartiromo asked which categories of toys were performing well at FAO Schwarz.

Schmults replied "Plush (FAO's signature stuffed animals) as well as dolls and action toys for boys - such as Star Wars and Captain Jack Sparrow (from Disney's Pirates of the Caribbean.)

Schmults also said "The average transaction price at FAO this time of year is about $50. (FAO is winning) because of the quality of the product and the marketing strategy to offer only the best. The strategy takes us out of the commodity toy business which is cutthroat."

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