Contact: Renee Hollinger, VP Marketing/Communications

Exhibit 99.1


For further information:

FAO, Inc.

2520 Renaissance Boulevard

King of Prussia, PA 19406

Contact: Renee Hollinger, VP Marketing/Communications

610-292-6600 x2205


FAO, INC. INSTALLS INITIAL BOUTIQUES AT SAKS INCORPORATED'S DEPARTMENT STORES


Agreement extended to include certain Saks Fifth Avenue locations


King of Prussia, PA, August 27, 2003 FAO, Inc. (NASDAQ: FAOO), a leading specialty retailer of toys and juvenile products in the United States, today announced it had completed the first round of boutique installations in Saks Department Store Group stores.


As previously announced in February, FAO and Saks entered into an agreement whereby FAO would install boutiques utilizing its FAO Schwarze2 , Zany Brainye2 , Right Starte2 , and FAO Schweetze2 brands in Parisian, Proffitt's, McRae's Younkers, Herberger's, Carson Pirie Scott, Boston Store and Bergner's stores operated by the Saks Department Store Group ("SDSG"). Since then, the parties have begun working to extend the agreement to include the Saks Fifth Avenue division of Saks Incorporated.


Currently, FAO has completed 16 installations with the Saks Department Store Group including 8 FAO Schwarz, 4 Zany Brainy and 4 Right Start boutiques. Six more installations are scheduled for September in both Saks Department Store Group and Saks Fifth Avenue stores. In addition to the boutiques, FAO and Saks are installing seasonal shops in approximately 230 SDSG department stores and 9 Saks Fifth Avenue stores utilizing the FAO Schwarz brand.


Jerry R. Welch, President and Chief Executive Officer of FAO, Inc., said, "We are quite pleased with the initial rollout of our boutique concepts with Saks. After completing the installations scheduled for September, we will devote the balance of the year to modifying and enhancing the various formats. We believe that our partners at Saks are reinventing the department store business and we are very glad to be playing a role in this effort."


George Jones, President and Chief Executive Officer of Saks Department Store Group, said, "Our customers' initial responses to the FAO boutiques have been terrific. It is really a pleasure to watch their reactions, especially ...