FAO Schwartz has announced that the initial response to its holiday marketing for its stores, catalogue, and Website have been weaker than expected, and that its liquidity heading into the holidays is threatened.  It has asked vendors to reduce shipments and extend terms with no guarantee of positive responses.  It has also requested an over-advance from its lenders, which could put it into default on its loans.  As a result of its cash problems, FAO is asking its investment bankers to explore strategic alternatives, including a sale of the company.