Macy's Inc. extended its existing pact with toy retailer FAO Schwarz. The expandedwill bring FAO-branded toy boutiques to 685 Macy's stores in the U.S. that currently carry children's clothing. (Macy's operates 812 locations overall.) The two firms aren't wasting any time either. As many as 275 of the FAO boutiques will be open by fall, in time for the all-important holiday shopping season. The rest will open in 2009 and 2010. The two firms originally teamed up in September, 2007, when Macy's brought an FAO boutique into the former Marshall Field's flagship on State Street in Chicago. Then in October, the firms hinted that a broader partnership might be in the works. Macy's in recent years lost market share in the toy segment to specialty retailers and discounters such as Wal-Mart and Target, which now dominate the sector. FAO had its own bout of troubles, filing for bankruptcy in 2003. It has since been reborn under new leadership.