Kmart, Wal-Mart take control of online counterparts

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By Jennifer Disabatino

(IDG) -- Kmart Corp. and Wal-Mart Stores Inc. announced Monday that they would merge with their respective online counterparts to better integrate their retail operations.

Both retail giants established separate, independent companies in 1999 to sell their merchandise online. While Troy, Mich.-based Kmart provided little specifics on the merger in its announcement, Bentonville, Ark.-based Wal-Mart said it wants to more tightly integrate its stores with the online retail operation, Walmart.com, which is based in Palo Alto, Calif. The two companies' IT operations will remain separate.

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"Existing Walmart.com business functions -- including technology development, site design and merchandising -- will remain based in the San Francisco area," Walmart.com CEO Jeanne Jackson said in the announcement.

The Walmart.com operation will report to Tom Schoewe, executive vice president and chief financial officer at Wal-Mart, who oversees IT for the company. Wal-Mart does not anticipate layoffs as a result of the buyout.

"We are proud of what the Walmart.com team under the leadership of Jeanne Jackson has accomplished in the past 18 months, and the positive way customers are responding to our site," said Lee Scott, president and CEO of Wal-Mart.

"While we remain as committed as ever to meeting the needs of our online customers, it is clear to us that the next evolution for Walmart.com is to establish an even deeper integration between our online business and the operations of our Wal-Mart stores," Scott said.

According to the announcement, Jackson will remain CEO of Walmart.com.

It was not as clear from Kmart's announcement what the retailer will do with BlueLight.com LLC, the San Francisco-based company that sells Kmart goods on the Web. Kmart owns the majority of BlueLight.com stock already and will acquire all outstanding shares by Aug. 1, according to the announcement.

A Kmart official said the deal is contingent on approval from BlueLight.com stockholders.