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TRU Reinvents Its Retail Footprint

TRU Reinvents Its Retail Footprint
At Toys"R"Us, Christmas is the most wonderful time of the year, but more important, it is the period in which the specialty retailer will generate a significant portion of its business. The executive team at TRU,

At Toys"R"Us, Christmas is the most wonderful time of the year, but more important, it is the period in which the specialty retailer will generate a significant portion of its business.

The executive team at TRU, led by Jerry Storch, chairman and chief executive officer, will pull out all the stops in a retail full-court press to entice consumers with exclusive product and new formats—an effort that will double capital expenditures from 2009.

On the heels of announcing plans to open 600 TRU Express stores—six times the amount opened last year—the retailer began the nationwide rollout of 10 FAO Schwarz Christmas pop-ups.

The FAO Schwarz pop-ups will be about 2,500 square feet and will feature high-quality, exclusive, soft collectible plush; a small replica of the Big Piano mat; wooden and tin toys; collectible ornaments; and branded gifts. More specific products will include Harry Potter toys and dress-up clothes, Fancy Nancy books, Madame Alexander dolls, Schleich Smurfs figures and LittleMissMatched accessories.

Locations for the shops are Tysons Galleria in McLean, Va.; The Mall at Chestnut Hill in Chestnut Hill, Mass.; Garden State Plaza in Paramus, N.J.; Aventura Mall in Aventura, Fla.; The Westchester in White Plains, N.Y.; Old Orchard in Skokie, Ill.; Oakbrook Center in Oak Brook, Ill.; and South Coast Plaza in Costa Mesa, Calif. The shops will be open until mid-January 2011.

The retailer's plan to significantly ramp up the number of its Express stores to 600 will have the effect of doubling the amount of doors for the chain. There are currently 585 TRUs, as well as 260 Babies"R"Us. About 300 of the smaller formats opened in mid-September in locations including the Mall of America in Minnesota, the Danbury Fair Mall in Connecticut and the Dallas Galleria in Texas.

"There was an opportunity to capitalize on vacant real estate," says Storch. The pop-ups could be within a quarter mile of a full-sized TRU, says Storch, but the Express stores provide incremental business, offer a convenience factor and address a different purchase occasion than a full-sized store.

According to Storch, the smaller formats offer a high return on investment. "We don't try to remake the space. The point is the product," he says.

The most popular purchase at the Express stores has been gift cards. Store employees provide consumers with a map and directions to the nearest full-size TRU if the product they are looking to purchase is unavailable. The 600 Express openings will create 10,000 jobs nationwide.

The specialty retailer has also opened eight permanent outlet stores averaging about 5,000 square feet.

In addition, efforts continue to revamp the company's store base. In 2010, seven "R" Superstores will be added, and 43 side-by-side TRU and BRU locations are planned.

Plans for TRU's flagship store in Times Square will include the addition of a snack area featuring Scoops, Häagen-Dazs, David's Cookies and Seattle's Best. Also at the flagship, a Wonka shop will feature branded product across categories including toys, apparel and candy.

In addition to its in-store initiatives, TRU is loading its shelves with the hottest toys, new lines and product exclusives. Available only at TRU will be the Disney/Pixar Toy Story 3 Imaginext Tri-County Landfill from Fisher-Price, Disney Princess & Me dolls from Jakks Pacific, Phineas and Ferb Acoustic Guitar from First Act and the CSI Junior Investigator Kit. Adding some international flair to U.S. shelves will be Cicciobello dolls from Italy's Giochi Preziosi.

Second quarter financial highlights at TRU included comparable-store net sales up 0.6 percent domestically and down 3.2 percent internationally. The declines were blamed, in part, to a struggling video game market.

Total net sales were flat over the prior year period at $2.6 billion. Adjusted EBITDA was $138 million, compared with $145 million in second quarter fiscal 2009.

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