In a regulatory filing, the online retail giant said the New Jersey Superior Court's Appellate Division on Thursday denied its request to postpone its court-ordered separation from longtime partner Toysrus.com, pending an appeal.

The company said the decision could lower its operating profit by as much as $25 million for the current quarter and $50 million for the year.

Toyrsus.com — the online arm of Wayne, N.J.-based Toys R Us — had won the right in March to sever its 10-year agreement with Amazon, following a bitter two-year legal battle over terms of the contract.

That ruling put into motion a 90-day separation agreement between the companies — one that would remove the online toy store's vast selection from Amazon's site by July 1.

But Amazon reversed course after the decision, announcing on its April 25 first-quarter conference call that it had appealed the court's decision in an effort to reinstate the partnership.

While the company warned investors that its operating profit could be lowered by as much as $50 million for the year if it didn't prevail, Amazon opted not to include the potential impact in its financial guidance for the year.

The company said it believed it would prevail on the appeal "and that Toysrus.com's claims lack merit."

What the company knew, but left out that day:

• New Jersey Chancery Court Judge Margaret Mary McVeigh had denied the motion for a stay on April 20.

• Amazon appealed McVeigh's order to the New Jersey Superior Court's Appellate Division, and filed a motion for urgent review. The appeals court quickly denied the motion, indicating it would hear the case in due course.

Even if Amazon eventually prevails in court sometime next year, both court orders — which were delivered before the company's earnings call — indicated that the partnership would end before Amazon's appeal was heard in court, said David Garrity, an analyst with New York-based Dinosaur Securities.

"Amazon is treading very close to the edge," Garrity said. "From that standpoint, we could say Amazon is testing investors' credulity."

Amazon spokeswoman Patty Smith said that once the appellate court denied the company's request on Thursday for a stay, "we felt it appropriate to provide an update."

Smith said the timing and outcome of the litigation are uncertain, and there are a wide variety of potential outcomes. "Keep in mind, all of the court's rulings are already public documents and have been reported on throughout the case," Smith said.

Sean Connor, a University of Washington associate professor of law, said he wouldn't go so far as to say Amazon violated securities laws, but called its approach "misleading."

"It seems to me it's still a material event that they lost at the district-court level," Connor said.

Toysrus.com said in court filings that it paid $50 million in annual fixed fees, plus other fees. That amounts to $12.5 million a quarter in base fees that Amazon could no longer collect.

Meanwhile, Toysrus.com said last week that it hired GSI Commerce to power all of its toy- and baby-product sites, starting July 1.

Amazon's shares fell 88 cents to $34.76, and dipped another 13 cents in after-hours trading Friday.

Monica Soto Ouchi: 206-515-5632 or msoto@seattletimes.com

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