Vendex to Cut FAO Schwarz Jobs
AMSTERDAM, Netherlands (AP) _ Dutch retail company Vendex KBB said it will cut one third of the 1,500 jobs at FAO Schwarz, as it prepares to sell the loss-making U.S. subsidiary _ including the flagship New York City store _ to U.S. toy retailer The Right Start.
The companies signed a letter of intent on the sale Monday evening. The Right Start is based in Calabasas, Calif.
Before the deal is concluded in January, the Dutch retailer said it will close 17 of 42 FAO shops across the United States. Most of the job cuts will come from those store closures, Vendex said. No further details of the closures were released.
Vendex KBB, formed by the merger of Dutch companies Koninklijke Bijenkorf Beheer and Vendex in 1999, had said it planned to pull out of the U.S. and focus on European operations. The company bought FAO Schwarz in 1990 for an undisclosed sum.
The sale of FAO Schwarz became a priority after the upscale toy store chain posted a first half operating loss of $8 million this year.
Vendex was so eager to sell the U.S chain it agreed to pay tens of millions of in restructuring charges, cover expected losses $17.6 million for the full year and lend the buyer $18 million for integration costs.
As part of the agreement, Vendex will receive a 15 percent stake in The Right Start, but plans to divest the interest as soon as possible.