A lawsuit filed in Seattle's King County Superior Court Wednesday on behalf of Kimberly Alguard of Lynnwood, Wash., contends the retailing behemoth accepted Christmas orders knowing the company couldn't deliver in time for the holiday. The suit seeks a judge's approval for a class action on behalf of disappointed Toys "R" Us customers nationally who had ordered by Dec. 14, the cutoff date for Christmas delivery with premium shipping.
"This was the first Christmas where my son could grasp what it's all about," Alguard said. "For me, Christmas is about kids, and it wrecked my Christmas that I was out until 1:30 a.m. Dec. 23 just to get some of the gifts Toysrus.com had promised."
The 1999 holiday season represented Toys "R" Us' first major push online. Internet toy sales approximately quadrupled from a year earlier, and Toys "R" Us was swamped. The company first set early deadlines for Christmas orders, Dec. 10 with standard delivery, and then had to hand out US$100 gift certificates when it couldn't fulfill many of the requests made before the cutoff. The problems increased 1999 losses for Toyrus.com a nickel, to 20 to 25 cents a share.
Fraud alleged
Rather than a foul-up, the suit filed by the Hagens Berman firm alleges fraud. Alguard said she had ordered gifts for her four-year-old son by Dec. 7, requested three to six day delivery, was promised delivery by Dec. 22 -- and then was not notified until the night of Dec. 22 they wouldn't arrive for Christmas.
The suit alleges Toysrus.com President John Barbour announced on Dec. 22 that the company would not be able to deliver promised gifts, said Alguard's attorney, Steve Berman.
The site guaranteed Christmas delivery by standard shipping for toys ordered by Dec. 11, 1999, and premium shipping for toys ordered by Dec. 14, 1999.
The Web site, like many other electronic commerce sites, is expected to lose money for the fourth quarter, ending this month.
Toys "R" Us Tuesday named John Eyler, the top executive from rival FAO Schwarz, as its president and chief executive, handing him the challenge of recouping market share lost to discounters and improving Internet operations that faltered during the holidays.
Disappointing Christmas
Toys "R" Us endured a disappointing Christmas season with a decline in sales at U.S. stores open more than a year.
Earlier this month, it said same-store sales fell two percent for the nine-week holiday season, ended Jan. 2. The holiday results led the company to scale back earnings estimates to US$1.10 for the year ending January 2000 from US$1.40.
Toys "R" Us lost 20 cents to 25 cents a share from its online business. While it is fairly common for e-commerce enterprises to lose money, Toys "R" Us resorted to issuing $100 coupons to Internet shoppers who did not receive their orders in time for Christmas.
Toysrus.com had problems with site outages in late November, due to heavy traffic to the Web site.
Shares rose 1/8 to 11-11/16 on the New York Stock Exchange on Wednesday. Its shares have been left behind during the stock market rally of the 1990s.
