Sears Suspends 401(k) Match in Face of Declining Sales

January 2, 2009 (PLANSPONSOR.com) - Sears has announced that it is suspending its 401(k) match for most employees.

A Chicago Sun-Times article, quoting a December 30 memo to employees from Sears Holdings Corp. Interim CEO Bruce Johnson, said the match suspension is effective January 31, 2009, and that the company will consider reinstating it when its financial performance improves.

“In this difficult economy and fast changing retail environment, we need to remain flexible and focused on improving our operating metrics and continuously look for ways to reduce expenses,” Johnson said in the memo, according to the newspaper. “Remaining committed and steadfast in our attention to our financial priorities – improving margins, tightly controlling expenses and focusing on cash generation ­ should position us to perform well when the economy improves. We are embarking on a New Year. Many tough business decisions will be made now and in the coming year.”

Hoffman Estates, Illinois-based Sears now matches 100% of the first 3% of an employee’s contribution, and matches 50% up to the next 2%, a Sears spokeswoman told the newspaper Friday.

Sears has appointed new executives of its business units, closed unprofitable stores, and offered extended sales as it fights to turn around declining sales and earnings, the Sun-Times noted.

MEMO FROM SEARS Interim CEO and President Bruce Johnson

Date: Dec. 30, 2008

To: All Sears Holdings Associates

From: Bruce Johnson, Interim CEO and President

Re: Embarking on the New Year ­ 2009

As we approach the end of the holidays, I'd like to thank all associates in our stores, distribution centers, home services units and support centers for their diligent efforts and hard work executing our plans for this critical selling season. I appreciate your keen focus on making our customers feel good about shopping with us, in our stores and online.

In this difficult economy and fast changing retail environment, we need to remain flexible and focused on improving our operating metrics and continuously look for ways to reduce expenses. Remaining committed and steadfast in our attention to our financial priorities - improving margins, tightly controlling expenses and focusing on cash generation ­ should position us to perform well when the economy improves.

We are embarking on a New Year. Many tough business decisions will be made now and in the coming year. Effective Jan. 31, 2009, we will be suspending the company matching contributions to the U.S. and Puerto Rico 401(k) Savings Plans.* As we continue to look for ways to control expenses, this change is expected to provide significant savings to the company during the 2009 fiscal year. This change will remain in effect until our financial performance improves to a level adequate to support reinstating the match benefit.

We have a lot of work ahead of us in 2009, but I remain optimistic that we will win. Thank you for your continued support.


«