Updated: Embattled retailer Woolworths has stopped selling toys online during the key Christmas period, shocking and delighting rivals.

Woolworths, one of the biggest toy retailers in the country, said the decision is part of its changing multichannel strategy, which was revealed by chief executive Steve Johnson in its interim results in September.

The retailer was reportedly running special online toy promotions yesterday morning, before taking toys off the site last night.

Rivals say they are surprised by the timing.

“There’s no way you’d take toys off before Christmas,” said one toy retailer. “It may be cost cutting but it’s not the kind of cost cutting that will work.”

CDs, DVDs, books and mobiles can still be bought on the site.

The change comes as speculation about Woolworths’ future grows, with fears arising at the weekend that it may be forced into administration this week.

A Woolworths spokeswoman denied the decision is a knee-jerk reaction to recent events.

Update: A Woolworths spokeswoman retracted an earlier statement that the retailer would stop multichannel retailing and that the decision to stop selling toys was part of a plan to take down the site.

She added: “We said in the interim results announcement that we were going to reduce the number of products sold by our online operation, and that's what we're doing, as planned."

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