RadioShack cutting 401(K) retirement matching plans
RadioShack Corp., the struggling electronics retailer, will stop matching employees' retirement- fund contributions and close stores to help cut costs.
RadioShack will discontinue matching for 401(k) and 1165(e) plans on Feb. 1, according to an internal memo from Chief Executive Officer Joe Magnacca that was obtained by Bloomberg. The company plans to close as many as 1,100 stores in its next fiscal year, contingent upon consent from lenders, some of which have blocked attempts to shut them. RadioShack is also reviewing health benefits, according to the memo.
"As a result of these ongoing cost reductions, we are making several difficult but necessary decisions that will allow us to further contain costs and expenses," Magnacca said in the memo.
RadioShack is continuing to look at cost-saving measures, said Merianne Roth, a company spokeswoman. She declined to comment on the memos.
The electronics retailer, which has lost money in each of its 10 latest quarters, is trying to stem losses that it has said could force it to seek bankruptcy. A turnaround plan that would have shuttered as many as 1,100 underperforming stores was previously rejected by creditors including Salus Capital Partners LLC, a unit of Harbinger Group Inc.
Salus, an investment firm that extended the retailer a $250 million term loan last year along with Cerberus Capital Management LP, said in a letter this week that RadioShack was in default on the obligation and was demanding repayment, a move that may complicate a turnaround.
RadioShack, based in Fort Worth, Texas, will contest the move and may consider various actions, according to a person familiar with the matter. RadioShack was taken by surprise by Salus's action, which came after it posted strong sales over Black Friday weekend, the person said.