Although it had gained a rep over the last few years for having dirty stores and a disinterested floor staff, TRU is well on its way to becoming a place where people actually want to shop, thanks to CEO and chairman John Eyler. The playbook for TRU’s turnaround has focused on three areas: content, presentation and personnel.

In particular, Eyler’s emphasis on developing stable licensed (see Gravity Games) and proprietary (see Animal Alley) lines–a practice he honed as CEO of FAO Schwarz–has seen TRU increase its exclusive merch count from 13% to 20% in less than a year and, in the process, has helped to immunize the chain against the here-today-gone-today volatility of entertainment-driven merch.

Also paying dividends is the company’s continuing efforts to refurbish its stores. The C-3 format, which TRU has successfully implemented in 60% of its domestic locations, eschews the warehouse-style rows upon rows of product, in favor of ‘worlds’ of merch themed by play that consumers can navigate more easily. So far, consumers are responding favorably. Year-to-date sales at C-3 locations have outpaced the old TRU stores by 7%, according to Richard Zimmerman, a TRU analyst and managing director of equity research for Philadelphia-based Commerce Capital Markets.

TRU personnel have also received something of a retrofit. To improve customer service, Eyler ordered more training for floor staff, raised employee salaries (labor costs increased 12% for fiscal 2001), and made it a corporate mandate to hire the best and the brightest the world has to offer for key executive posts. ‘Eyler realizes that in order to turn your brand around, your employees have to be excited about what they’re doing,’ says Zimmerman.

Eyler has also shown a propensity for taking TRU’s brand outside of its established confines by testing both hybrid stores in smaller U.S. markets (incorporating all four of the company’s store concepts) and TRU-branded boutiques in Giant Supermarkets.

Eyler and TRU’s crowning achievement, though, will be this month’s launch of the 101,000-square-foot Times Square Flagship store, which comes replete with animatronic animals and a ferris wheel. Despite TRU’s flat revenues (down 4.7% for the first half of the year), the company’s stock is up 12%, evidence of investor confidence in Eyler’s vision for TRU.

Biggest challenge facing the company in 2002:

Making Toysrus.com profitable. Revenue growth for the division has been meteoric (up 276% in the first half of 2001 versus the same period in 2000), but analysts say the partnership with Amazon is at least a year or two away from becoming a positive contributor.