BlueLight folding into Kmart, lays off staff

by Ashlee Vance

August 9, 2001 —

BlueLight.com LLC has initiated another round of major layoffs that will likely leave the online retailer with just a "skeleton crew" maintaining the company's Web site for its parent Kmart Corp., according to a source at the company who was among those laid off.

BlueLight dismissed 50 to 60 workers, close to half of the company's staff. The company will continue making layoffs over the next 30 to 45 days, leaving a few employees to keep up with key financial and technological procedures, the source said.

BlueLight did not return repeated calls seeking comment.

BlueLight endured another round of heavy layoffs in May, as the company attempted to pull back on spending and share similar resources with Kmart. BlueLight then announced last month that Kmart would buy back all outstanding shares of BlueLight and take full control.

BlueLight has been on a cost-cutting mission for some time, as Kmart tried to lend its experience in the retail sector to the flashy online store. BlueLight previously trimmed staff from its marketing and merchandising departments, turning to Kmart to handle those tasks.

Kmart has poured millions of dollars into BlueLight, trying to lure customers with offers of free Internet access and discounts on everything from tennis shoes to BlueLight-branded PCs. In the past few months, BlueLight scaled back its free Internet service by allowing customers who spent a certain amount of money on the Web site to surf for free, while others had to pay a subscription.

The company has also gone though repeated management changes as it tried to meld an online operation with Kmart's old-world retail business. During the May round of layoffs, Chief Executive Officer Mark Goldstein stepped down. In addition, Chief Financial Officer Chris Lien and Chief Web Officer Brian Sugar also departed.

BlueLight, based in San Francisco, can be reached at +1-415-299-9700 or http://www.bluelight.com/.

IDG News Service