CINCINNATI -- FAO Schwarz will open toy stores in close to 700 Macy's department stores, including the Huntington Mall store, over the next two years in a move that both stores hope will drive traffic in a tough economic environment.

The two companies announced Friday that about 75 full-size FAO Schwarz toy stores will open across the country in the fall, along with about 200 smaller shops that will be up to 300 square feet. Macy's shareholders learned of the venture at their annual meeting Friday.

Macy's CEO Terry Lundgren told shareholders that FAO Schwarz will open stores in up to 275 of Macy's stores this fall, and the companies plan to expand over the next two years to include 685 Macy's stores that have children's departments.

That would include the local Macy's, according media spokesman Jim Sluzewski, although he did not have a timeline on when the addition would take place.

The partnership will bring toys back to Macy's, said Lundgren, chairman, president and chief executive officer of Cincinnati-based Macy's.

"We expect it to drive new customers into our stores and to insert a new level of fun and excitement onto the children's selling floor," he told shareholders.

Lundgren said FAO Schwarz gave its first Macy's store-within-a-store a trial run in Chicago late last year.

"Not only did it perform beyond our expectations, the entire children's apparel business performed well above our expectations," Lundgren said.

Lundgren told reporters after the meeting that the deal was one more step toward reinventing department stores -- one that he said would give customers another reason to choose Macy's over its competitors.

Patricia Edwards, a retail analyst with Wentworth, Hauser and Violich, thinks the move is a good one.

"Macy's had gotten away from having a toy department, but I think that if you can incorporate more of the shopping experience and give the consumer one more reason to come into the store and keep them in your store longer, it's a good thing," Edwards said.