September 3, 2002, 12:00 AM

The Green Light

(Page 3 of 3)

“Kmart has to find a way to prove itself as a geographical or physical destination for shoppers before BlueLight really gets active,” says William Brandt Jr., CEO of Development Specialists Inc., a bankruptcy and turnaround specialist firm. “If you can’t exceed past performance at similarly open stores, that’s a measure of declining market share and traffic.” In fact, Kmart in June reported that on a comparable store basis, its first quarter declined 8.8% from the first quarter of last year. “ is not going to be able to do anything about that; it’s got to be the other way around,” Brandt says. “As competent as the efforts may be to get the Internet strategy in order, this is the tail wagging the dog. Kmart has got to perform really well this Christmas to show viability.”

Recent sales figures show that some Kmart customers spooked by the bankruptcy filing may be returning. While there’s been a downward trend in comparable store sales this year, the rate of decline has been shrinking since May. May’s comparable store sales were 16.4% less than April’s, while June’s declined 11.4% from May’s and July’s declined only 8.7% from June’s.

Blunck knows what he’s up against and how critical the holidays will be for both the web site and its parent. No stranger to the uphill climb when he signed on with Kmart and BlueLight, he remains guided by his original assessment of BlueLight’s prospects. “Before I take anything on, I want to know if most of the elements required for success are around. I like nothing more than to go into a tough situation and fix it up,” he says. “I did it for a long time as a consultant and I’m very good at it.”

At the same time, realism tempers Blunck’s confidence. “We pull our one oar in the Kmart boat, do that great, and keep hoping for the best for Kmart,” he says. “We all realize that the fate of BlueLight hinges on that.”

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