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Wal-Mart, Kmart to reel in sites

The two retail giants announce plans to fold and into their respective parent operations.

Wal-Mart and Kmart are bringing their dot-com children back home.

The two retail giants announced on Monday plans to fold and back into their respective parent operations. In the process, Wal-Mart and Kmart will buy out the minority stakes held by venture capitalists and other shareholders in their dot-coms.

Old-line retailers such as Barnes & Noble, Toys "R" Us and PetsMart set up independent online units in the heady days of the Internet stock boom. The reasons they gave were plentiful: to cash in on the sky-high Internet valuations, to attract management and engineering talent and to cultivate new ideas and new ways of thinking.

But with the crash of Internet stocks, a growing number of retailers have reeled in their online operations. In recent months, Staples and Saks, the parent company of Saks Fifth Avenue, have also brought their dot-com units back in-house.

Wal-Mart gave few details of its acquisition of By bringing back in-house, the companies will be able to work together to attract and market to customers, said spokeswoman Cynthia Lin.

"We've learned there's one customer," Lin said. "Our greatest opportunity is to integrate the whole shopping experience for customers."

Lin declined to say how much the Internet stock crash played into the decision.

Meanwhile, Kmart has agreed to acquire all outstanding shares of BlueLight by Aug. 1, the company said in a news release Monday.

"BlueLight will say nothing more than to confirm that BlueLight has received an offer from Kmart for a potential merger which is currently under consideration," said Dave Karraker, a BlueLight spokesman.

The decision to absorb BlueLight's operations comes two months after a sweeping restructuring at the e-tailer. In May, BlueLight's former chief executive, Mark Goldstein, stepped down, and much of the company's marketing and merchandising duties were shifted to Kmart.

Goldstein became a "long-term Internet adviser to Kmart."

Kmart launched San Francisco-based BlueLight in 1999 with the help of Softbank Venture Capital. Kmart owns 60 percent of the privately held company, while Softbank, Martha Stewart Living Omnimedia and BlueLight employees own most of the remaining shares, Karraker said. (Softbank is an investor in CNET, publisher of

The deal is subject to approval by the holders of BlueLight common and preferred stock.

Wal-Mart spun off last year after struggling to develop and market its online site. Accel Partners took an undisclosed minority interest in the Brisbane, Calif.-based spinoff. The spinoff brought in Jeanne Jackson from Banana Republic to head its operations.

Although the site has seen an upsurge in traffic and sales since the spinoff, it also has had its problems. Last year, was closed for a month for remodeling just before the holiday season. Despite the lengthy outage, the company still experienced several glitches during December.

Earlier this year, laid off 24 employees in its marketing and sales departments.