NEW YORK (CNN/Money) - Toy retailer FAO Inc. reported fiscal third-quarter results Monday which showed that the owner of FAO Schwarz, Zany Brainy and Right Start stores entered the important holiday shopping period with another round of financial losses.

FAO, based in King of Prussia, Pa., said it lost $23.7 million, or 66 cents a share, during the 13 weeks ended Nov. 2. That compares with a net loss of $9.9 million, or $4.07 a share, in the third quarter of fiscal 2001. Average shares outstanding for the quarter rose to 35.76 million from 7.26 million a year ago.

Sales rose 52.3 percent to $89.3 million, helped by the company's acquisition of FAO Schwarz and Zany Brainy.

FAO's announcement comes as retailers brace for what could be a tough holiday season if consumers choose to spend less amid a sluggish economy and jitters about unemployment and a possible war with Iraq.

Specialty toy retailers also are being squeezed by increased competition from discount chains such as Wal-Mart Stores and Target Corp. as well as a difficult economy.

FAO, which cut its financial guidance for the latest quarter last month, has lost money in every quarter since the first quarter of 2000, when the company broke even.

Looking ahead, the company expects that even a strong fourth quarter will not save it from losing money this year.

Shares of FAO (FAOO: Research, Estimates) rose 26 cents to $1.91 Monday, narrowing its year-to-date losses to 61 percent.