Renee Hollinger, VP Marketing/Communications

Exhibit 99.2


For further information:

FAO, Inc.

2520 Renaissance Blvd.

King of Prussia, PA 19406

Contact:

Renee Hollinger, VP Marketing/Communications


610-292-6600 x2250


FAO, INC. AND BORDERS GROUP SUBSIDIARIES SIGN LETTER OF

INTENT TO ENTER BUSINESS RELATIONSHIP


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 has entered into a letter of intent with Borders, Inc. and Walden Book Company, Inc., subsidiaries of Borders Group, Inc. (NYSE: BGP). The letter of intent signals the beginning of a business relationship between the two companies to explore potential joint initiatives that complement each company's brands and provide enhanced products and services to their customers.


Initially, Borders Group's expert buyers will make recommendations regarding books, music and video assortments to be made available in all FAO Schwarzd2 , Zany Brainyd2 and The Right Startd2 stores, and then will supply those products. Ultimately, Borders Group will provide management of the inventory of the book, music and video departments of the FAO, Inc. family of stores. With a focus on meeting the entertainment and education needs of children and their families, the two companies will also consider a variety of other possible ways to work together moving forward.


For example, the two companies will test the concept of FAO-operated collections within Borders and Waldenbooks stores offering toys, educational and developmental products for kids under the Zany Brainy and FAO Schwarz brand names. The first test installations will take place this fall with up to 25 collections at Borders stores and up to 12 at Waldenbooks stores.


Jerry R. Welch, President and Chief Executive Officer of FAO, Inc., said &quo ...