The purchase includes the intellectual property related to Footstar's Kmart business. The sale was in anticipation of the winding down of Footstar's business at the end of 2008 when its exclusive license to operate the footwear departments in Kmart stores expires.
In a separate agreement, Kmart agreed to offer employment to most of the Footstar's employees.
"This strategy allows Sears Holdings to achieve a more efficient and effective footwear business for its Kmart stores, while providing employment opportunities with Sears Holdings for substantially all of the retail and certain of the support employees of Footstar," a Sears spokesman said Tuesday.
Footstar, in its annual report filed last month with the Securities and Exchange Commission, said the operation of the footwear departments in Kmart stores "accounts for substantially all of the company's net sales and net profits."
The filing also said that as of the end of 2007, Footstar operated in 1,388 Kmart units and in 859 Rite Aid stores in the western U.S. Footstar posted an operating profit of $52.9 million in 2007. Sales from Kmart stores totaled $614.2 million last year, a 3.5 percent decline from 2006.