The battle for holiday toy sales is joined, and like any battle, events are taking some unexpected twists and turns.  Here's the news from the front.

Wal-Mart, stung by lower than expected November sales and lackluster results on Thanksgiving weekend (see 'Weekend Sales Reports Mixed'), is going to the mattresses on prices, running special newspaper ads with price cuts of up to a third on around two dozen items, including LeapPad and Elmo toys, DVD players, and other items.

Toys R Us, which has instructed its bankers to explore strategic options including liquidation of its toy business (see 'Toys R Us on the Block?), has started getting bids for its toy business, according to TheDeal.com.  The report lists three suitors, all backed by banks or investment companies.  Two of the three are real estate companies eying the hundreds of sites the company owns, undoubtedly noting the success K-Mart has had in selling some of its under-performing store sites for big numbers.  The third is led by management.

FAO Schwartz re-opened its second store, the Manhattan flagship store, on Thanksgiving day.  The Las Vegas store also re-opened recently.  The chain, of course, went into bankruptcy, its assets were liquidated, and these stores are opening under new ownership.  The New York store was completely redesigned, and now includes an ice cream parlor selling house brand ice cream.  Although the FAO Schwartz business, with only two stores, is a shadow of its former self, it's great to see one of the pre-eminent brick and mortar retail toy stores open again.  And in keeping with its reputation for unique toys, the $50,000 toy Ferrari on the floor has been getting considerable press.