Wal-Mart, Kmart buy back their online divisions

Two major offline retailers—Bentonville, AR-based Wal-Mart Stores Inc. and Troy, MI-based Kmart Corp.— are buying back their online operations after having established stand-alone dot-com companies during the height of the web frenzy. Wal-Mart and Accel Partners, a California-based venture capital firm, announced that Wal-Mart is acquiring all the minority interest in Walmart.com. The companies did not release terms of the deal but explained that Walmart.com will remain a separate business unit within Wal-Mart. Wal-Mart is initiating the buyout to help establish integration between its offline and online programs.

Existing Walmart.com business functions, including technology development, site design and merchandising, will remain based in the San Francisco area. Jeanne Jackson will continue as president and CEO of Walmart.com. The Walmart.com operation will report to Tom Schoewe, executive vice president and CFO of Wal-Mart Stores. Wal-Mart does not expect to lay off any employees due to the change.

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Wal-Mart says it will look to integrate the online and offline programs for such services as photo finishing, prescription drugs, gift registries and others. Three Walmart.com executives--Neil Day, CIO, John Fleming, chief merchandising officer, and Greg Penner, senior vice president of finance and operations--are being promoted to senior vice presidents of Wal-Mart. In addition, Erik Hagerman has been promoted to vice president of creative.

Kmart also announced that it has entered into a merger agreement with Bluelight.com LLC, its online brand store that has been run separately since 1999. Kmart hopes to acquire Bluelight by the end of this month. The majority of Bluelight.com stockholders still must approve the merger.

Bluelight was formed in 1999 by Kmart, Softbank Venture Capital and others. Former Bluelight CEO Mark Goldstein left the company earlier this year around the time that Bluelight decided to move merchandising and marketing efforts back to its parent company in order to save money.