When the charming Connie Ennis purchases an extravagant electric train set during the bustling Christmas season at Crowley's, a popular New York department store, her actions raise the eyebrows of clerk Steve Mason. His suspicions prove valid as Connie works undercover as a professional "comparison shopper" for Crowley's competitor. After a long day of shopping, Connie, a war widow, returns home to her young son Timmy, bringing the train along with her. Timmy eagerly sneaks a glance at the train, mistakenly believing it to be his Christmas gift until Connie, unaware of his curiosity, sets the record straight.
That evening, Connie's longstanding admirer, lawyer Carl Davis, proposes marriage, but she hesitates to give him a definitive answer, feeling uncertain. When she discusses Carl's proposal with Timmy, he is firmly against the idea. The following day, as Connie attempts to return the train at Crowley's, Steve threatens her with the involvement of the store detective. However, upon hearing her story as a war widow with a child to care for, Steve ultimately issues her a refund, a humane act that unfortunately results in his termination.
In a twist of fate, Steve invites Connie to lunch, sharing his dreams of building sailboats with his friend in Balboa, California while they enjoy a meal in Central Park. Their blossoming connection takes a hit when they become separated in the hustle and bustle of the city. Steve later arrives at Connie’s apartment only to find Carl there. Tension rises as Carl shows discomfort at Steve's presence and has a brief altercation with Timmy, who is still upset about the train situation.
After Carl departs in frustration, Steve crudely suggests to Connie that she should stop trying to mold Timmy into a replica of his deceased father. Amidst this, he learns about Timmy's knowledge of the train and advises him to consistently "aim higher than the mark." As he prepares to leave, Steve impulsively kisses Connie, leading her to accept Carl's marriage proposal that same night.
On Christmas morning, Timmy discovers the train set left outside their apartment door, assuming it’s a gift from Connie. When he admits to Steve that he had seen the train earlier, Connie deduces its origin and seeks out Steve to confront him. Upon finding him in Central Park, she offers to pay him back for the train, but Steve declines, insisting he wants to support Timmy's hopeful spirit instead. Connie then gifts him a loud tie meant for Carl, resulting in an amusing exchange where Steve offers his old tie to a passing bum.
Connie soon divulges her plans to marry Carl on New Year’s Day, prompting yet another lecture from Steve about embracing the future rather than clinging to the past. Outraged by his comments, Connie storms off to reunite with Timmy, Carl, and her in-laws. However, fate has other plans as she is soon called to the police station to back up Steve's account, as he had been arrested for possessing stolen salt and pepper shakers, a present from the bum. Accompanied by Carl and Timmy, Connie shares Steve’s story with an amused police lieutenant, who eventually allows Steve to go free.
In an effort of goodwill, Timmy insists that Steve join them for Christmas dinner. The two competitors maintain a façade of politeness, but the tension culminates when Steve professes his love for Connie and expresses his desire to marry her. She coldly asks him to leave, while Steve, aiming to move to California once he secures a train ticket, bids a final farewell. The very next day, however, Timmy returns the train set to Crowley's, heartbrokenly requesting Mr. Crowley for a refund, ensuring Steve’s financial stability.
After returning home with his refund, Timmy presents the money to his worried mother, spurring her and Carl to visit Steve at his hotel. When Connie refuses to see him, Carl perceptively grants her a "divorce," realizing she harbors real feelings for Steve. Connie then offers the money to Steve, but he states that he won't propose again until she has genuinely moved on from her husband’s memory. Angered, she storms out yet again.
As the lonely New Year’s Eve arrives, Connie comes to a realization about her future being with Steve. While he celebrates the arrival of the New Year aboard a west-bound train, he receives a telegram that Connie and Timmy are on their way to join him, igniting a surge of happiness as he rushes to embrace them between the train cars.
