Macy's

(M) - Get Report

will be a lot less fun once the

Toys "R" Us

purchase of

FAO Schwarz

is complete.

The Toys "R" Us deal, announced Thursday, to acquire the upscale toy store will result in the elimination of FAO Schwarz in 260 Macy's stores -- just in time, inconveniently enough, for the holiday season. FAO-branded merchandise will be swept clean from the Macy's sales floor by November.

FAO Schwarz signed an exclusive agreement with Macy's last May, allowing the department store to open FAO-operated toy stores and sell products on macys.com.

The goal of the partnership had been to drive traffic, particularly in the children's department. The plan was to expand this store-within-a-store concept to about 685 Macy's stores by 2010.

While Macy's does not break out what percentage of sales toys account for, spokesperson Jim Sluzewski says it's "very, very small." Despite this clearly miniscule size, he said Macy's is still "reviewing the business to determine if we will pursue other opportunities in toys."

The financial terms of the Toys "R" Us/FAO Schwarz deal have not been disclosed, but all merchandising, management, distribution and marketing operations will immediately begin to transition to Toys "R" Us Inc., according to a release.

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