After a package containing Christmas gifts to Annie from her late parents arrives, Annie struggles with her first Christmas since their death.  Doug wants to be Santa for Timmy and Buddy tries to reassure Annie that she is a welcome addition to the family.

Annie tries to show off claiming she can do magic for a classmates birthday party however the rabbit doesn't exactly come out of the hat.  When Willie's attempts to help fail she turns to Doug who is a little too eager to step in.