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American Morning
Minding Your Business: Toy Trouble
Aired December 03, 2003 - 07:49 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
SOLEDAD O'BRIEN, CNN ANCHOR: The holiday season actually isn't being kind to all retailers, including one empire that is known for toys.
Andy Serwer is off today. Carrie Lee is "Minding Your Business" this morning, and she is live for us at the Nasdaq Marketsite in Times Square.
A really disturbing story, I think, this morning, Carrie, fair to say, right?
CARRIE LEE, CNN FINANCIAL NEWS: It is quite sad, Soledad. We're talking, of course, about FAO, the parent company of FAO Schwartz, which is the upscale toy company. The company has filed for bankruptcy again, and this is the second time that FAO has filed for chapter 11 bankruptcy in less than a year.
Now, as part of this move, the company plans to sell off its FAO Schwarz and Right Start store. So, we're likely going to see some inventory clearance sales after December 15. Also, the company is going to liquidate its Zainy Brainy business, which sells educational toys.
Now, remember, just last month, FAO said early holiday sales were weak. At least in New York, I think people like to walk through and see a lot of the toys that the company is selling, but with discounters like Wal-Mart and Target offering lower prices, perhaps that's where people are spending their money. So, the company's stock has been de-lifted here at the Nasdaq, and that is the latest on FAO -- Soledad.
O'BRIEN: Can you explain to me -- you mentioned that they're going to liquidate some of the businesses by a December 15th deadline. What's the big picture deadline? What point will they know whether they're going to be viable or not as a company? Before Christmas, do you think, or would that be too soon?
LEE: Well, I don't think that's going to happen, because they did de-list as part of this filing. Now, technically, a chapter 11 filing constitutes a restructuring rather than chapter 7, which means going out of business. But what they're going to try to do is sell the Right Start and FAO Schwartz to another company. So, FAO, as a company as we know it, will cease to exist.
O'BRIEN: All right, Carrie Lee for us this morning. Carrie, thanks.
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com.
Aired December 3, 2003 - 07:49 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
SOLEDAD O'BRIEN, CNN ANCHOR: The holiday season actually isn't being kind to all retailers, including one empire that is known for toys.
Andy Serwer is off today. Carrie Lee is "Minding Your Business" this morning, and she is live for us at the Nasdaq Marketsite in Times Square.
A really disturbing story, I think, this morning, Carrie, fair to say, right?
CARRIE LEE, CNN FINANCIAL NEWS: It is quite sad, Soledad. We're talking, of course, about FAO, the parent company of FAO Schwartz, which is the upscale toy company. The company has filed for bankruptcy again, and this is the second time that FAO has filed for chapter 11 bankruptcy in less than a year.
Now, as part of this move, the company plans to sell off its FAO Schwarz and Right Start store. So, we're likely going to see some inventory clearance sales after December 15. Also, the company is going to liquidate its Zainy Brainy business, which sells educational toys.
Now, remember, just last month, FAO said early holiday sales were weak. At least in New York, I think people like to walk through and see a lot of the toys that the company is selling, but with discounters like Wal-Mart and Target offering lower prices, perhaps that's where people are spending their money. So, the company's stock has been de-lifted here at the Nasdaq, and that is the latest on FAO -- Soledad.
O'BRIEN: Can you explain to me -- you mentioned that they're going to liquidate some of the businesses by a December 15th deadline. What's the big picture deadline? What point will they know whether they're going to be viable or not as a company? Before Christmas, do you think, or would that be too soon?
LEE: Well, I don't think that's going to happen, because they did de-list as part of this filing. Now, technically, a chapter 11 filing constitutes a restructuring rather than chapter 7, which means going out of business. But what they're going to try to do is sell the Right Start and FAO Schwartz to another company. So, FAO, as a company as we know it, will cease to exist.
O'BRIEN: All right, Carrie Lee for us this morning. Carrie, thanks.
TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com.
