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Bluelight Fades To Favor Kmart

BlueLight.com Tuesday officially shuttered its own individual site and began its new life with parent site Kmart .

Visitors to either property are redirected to the Bluelight.com URL, but greeted with the Kmart logo and store specials.

The changes reflect the Troy, Mich.-based discount retailer's attempts to emerge from Chapter 11 Bankruptcy and win back market share from the lower-priced Wal-Mart Stores Inc. and trendier Target Corp. . Kmart filed for bankruptcy in January.

The irony is that Bluelight was created to serve as Kmart's online arm at a time when brick-and-mortar stores were spreading their wings on the Web. Now the two sites are one in the same. Kmart has said it will continue to invest in the Bluelight strategy as long as it does not drain the company of resources. The name "Bluelight" referrers to the company's in-house specials.

"One of our new goals is to strengthen ties with our parent company," said BlueLight.com spokeswoman Abigail Jacobs. "People still have affection for Kmart and the Kmart name. It's more recognizable than the Bluelight name."

San Francisco-based Bluelight said the company's Internet service provider (ISP) service would remain untouched. Bluelight is still one of the lowest-priced major access providers in the country at $8.95 a month for unlimited access. The company boasts some 170,000 subscribers.

The service just wrapped up a promotion that offered one month of free online access to new subscribers.

In its heyday Bluelight was totally free. That of course changed in August 2001 after its ISP partner Spinway went belly up and the company figured out that banner advertising wasn't paying the bills.

The service recently added additional e-mail storage space (10 MB) and a POP3 email-forwarding system for customers free of charge courtesy of a deal with Synacor. eBillit has also stepped up to the plate to help BlueLight customers with their payments.

Bluelight.com made its most drastic changes last May, when it laid off 200 of 277 employees.

The site also stopped selling low-end items including most apparel and refocused on high-margin services like online photo processing and pharmacy sales.

But Kmart is upbeat about Bluelight's progress. The company said its online retail sales are about double from a year ago, and could hit $50 million this fiscal year, with the ISP adding up to $30 million more.

The discount retailer is certainly in dire need of a financial boost. Kmart said Friday it lost $1.45 billion for the first three months of this fiscal year. It's the second consecutive quarter that the company has lost more than $1 billion.