"This acquisition is another example of how we are playing to win by aggressively pursuing opportunities to advance our specialist position in the toy and baby products industries," says Toys 'R' Us. "The family of brands is well-positioned to be a strong competitor and capture more toy-buying dollars in the months and years ahead."

Toys R Us is planning a similar event, but with more emphasis on holiday-themed pricing of roughly 50 percent off bicycles, video games, doll houses and portable DVD players.

While the chain won't be selling holiday merchandise, it will be bringing unseasonal cheer, complete with Christmas cards and candy canes, to its stores on July 25.

"Everyone needs a little Christmas, right this very minute," the company said in a release last week.

"Our customers really love the fact that we do not celebrate the holidays until the day after Thanksgiving," she said, "and we have no plans to change that."

The deal combines two closely held retailers that have faced increased competition from the Internet and discount chains during the recession. U.S. retail sales of toys generated $21.6 billion in 2008, a 3 percent drop from 2007, according to researcher NPD Group Inc. Mass merchant, discount and online retailers saw the most modest declines, NPD said, as consumers looked for ways to buy non-necessities at the lowest cost.

"Financially, I think it's brilliant," Chris Byrne, a New York-based toy-industry analyst and director of content at TimetoPlayMag.com, said today in a telephone interview. "You get all of the cachet and the look of a specialty store and a destination with the operational efficiencies of a giant like Toys "R" Us."

At Wal-Mart Stores Inc., the world's largest retailer, entertainment, electronics and toys accounted for 14 percent of sales in the year that ended Jan. 31.

• Free Play Station 2 Deal - 6 Free Games, FREE '21' DVD and Free Play Station 2 DVD Remote with the purchase of the Play Station 2 System
• Free $50 Toys 'R' Us Gift Card with the purchase of a Black 16GB iPod nano
• Free Nintendo DS accessory with the purchase of Nintendo DS Brain Age Bundle or Nintendo DS Super Mario Bros. Bundle
• More than 80% off Xbox 360 Wired Guitar Hero Game Controller
• 60% off TOYMAX EyeClops from JAKKS Pacific
• 60% off Disney High School Musical 2 Figures 3-Pack
• More than 50% off Littlest Pet Shop VIP Plush Pets from Hasbro
• Up to 50% off Guitar Hero III: Legends of Rock Bundle for Wii, PS3 and Xbox 360
• 50% off Little Tikes Diggers
• 50% off Jumbo Talking Elmo from Fisher-Price
• 50% off Huffy Scooters (Power Rangers and Cinderella, sold separately)
• 33% off V-Tech Learning Laptop
• More than 30% off Thomas & Friends Train Sets (Thomas & Percy Wooden Starter Set and Great Race Take Along Set, sold separately)
• $60 off iHome Portable iPod Docking Station (iPod sold separately)
• $50 off Sony 7.2MP Pink Cybershot Digital Camera

In her opinion, [Judge] McVeigh took a rather dim view of the trial testimony of some Amazon executives, including that of the company’s billionaire founder Jeff Bezos, saying she had "no doubt his knowledge and understanding (of the Toys "R" Us agreement) went much deeper than revealed."

When pushed on the witness stand, "certain information 'just came back to him'" she said in the ruling, while another of Bezos' explanations was referred to as "rather childlike."

McVeigh also rejected Amazon’s efforts to defend itself by asking her to throw out e-mail evidence that may have included hearsay. She said she found it "incomprehensible... that a corporation dealing primarily in Internet commerce finds Internet communications to lack reliability."

And she repeatedly complained about the ambiguous use of language in memorandums, contract agreements and discussions, concluding that "the language as drafted whether intentional or inartful gave Amazon the words to play the game their way." Although the ruling does not include monetary damages, the loss of Toys "R" Us as a partner could have a significant financial impact on Amazon. The toy retailer, which was sold to a private investment consortium last year for $6.6 billion, says it is the nation’s largest online retailer and had been paying Amazon a base fee of $50 million annually plus a percentage of its sales.