Amazon appeals the Toys R Us court decision
Though it initially was silent about a New Jersey court decision that says Toys R Us Inc. can terminate its third-party e-commerce services agreement, Amazon.com now is speaking out.
As a result of a decision handed down in March by New Jersey Superior Court judge Margaret Mary McVeigh, Toys R Us has said it will terminate its e-commerce and merchandising agreement with Amazon.com within 90 days. The two companies signed their agreement in August 2000.
But in its most recent earnings release, Amazon says it is appealing the decision. The company, No. 1 in the Internet Retailer Top 400 Guide to Retail Web Sites, also says losing the court case will hurt its financial performance.
Amazon is forecasting net sales to total between $9.95 billion and $10.5 billion for 2006, while net income is expected to be between $390 million and $520 million. However, the negative court decision will impact financial performance, Amazon says.
We are appealing the recent court decision that terminates our ToysRUs.com contract and are seeking a stay of the termination pending a decision on our appeal, Amazon says. While we believe we will prevail and that ToysRUs.com`s claims lack merit, the timing and possible outcomes of this litigation are uncertain. If we do not prevail, operating profit could be negatively impacted by as much as $50 million for the year, including as much as $25 million in the second quarter.
Toys R Us was seeking to get out of its contract for Amazon to run the Toys R Us web site. The suit alleged that Amazon had violated a contract that granted ToysRUs.com exclusivity in the toys, games and baby products category on Amazon.com.
Toys R Us, No. 26 in the Internet Retailer Top 400 Guide to Retail Web Sites, says it is preparing a new e-commerce operation. We fully expect a smooth and seamless transition to our own independent web site at the end of the 90-day termination agreement, says a Toys R Us spokeswoman.
Back...
