Kmart, Wal-Mart take control of online counterparts

Kmart Corp. and Wal-Mart Stores Inc. announced yesterday 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 few specifics on the merger in its announcement, Bentonville, Ark.-based Wal-Mart said it wants to more tightly integrate its stores with its online retail operation,, which is based in Palo Alto, Calif. Kmart and Wal-Mart's IT operations will remain separate.

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

The operation will be run by Tom Schoewe, executive vice president and chief financial officer at Wal-Mart, who oversees IT for the company. Wal-Mart said it doesn't anticipate layoffs as a result of the buyout.

"We are proud of what the 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 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

It wasn't as clear from Kmart's announcement what the retailer will do with LLC, the San Francisco-based company that sells Kmart goods on the Web. Kmart owns the majority of 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's stockholders.

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