Leaked memo reveals that Mattress Firm will be putting some staff on furlough and suspending PTO, severance, and 401(k) match as the coronavirus crisis hits retailers
- In a leaked memo that was viewed by Business Insider, Mattress Firm CEO John Eck announced furloughs of some employees and significant benefits cuts for all in response to the coronavirus.
- The coronavirus outbreak has significantly disrupted the retail industry as potential customers stay home.
- Mattress Firm filed for bankruptcy in October 2018 and emerged a month later, having closed about 660 stores.
- The company is temporarily suspending PTO, severance, and 401(k) match, and it will also reduce store hours in some locations.
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Mattress Firm announced on Wednesday that it would be furloughing an unspecified number of employees and temporarily making cuts to some employee benefits, in response to the pressure that coronavirus is putting on the business.
Mattress Firm will be temporarily suspending PTO, severance, and 401(k) match, according to a memo sent by CEO John Eck to all employees on Wednesday. The firm will also reduce store hours based on performance, furlough an unspecified amount of retail sales associates, operations staff, and corporate staff, and freeze hiring and corporate travel.
Coronavirus has wreaked havoc on the retail industry, leading dozens of US retailers to temporarily close stores. Eck cited the coronavirus as an existential threat to the company.
"We believe if we take the appropriate actions, we survive," the memo read.
Mattress Firm filed for bankruptcy in October 2018, emerging in November 2018 having closed roughly 660 stores. Following bankruptcy, it had 2,600 stores and 9,500 employees. It has been owned by South African retail holding company Steinhoff International since 2016. Eck joined the company in May 2019.
"As the situation with COVID-19 rapidly changes, we must adapt and operate differently both in how we live our lives and how we manage our business," Eck wrote in a statement to Business Insider. "Mattress Firm has a history of doing whatever we can for our employees during challenging times. Unfortunately, due to the severity of the situation facing the world, our country, and our company, we have had to make extremely tough decisions, similar to other companies, to ensure we can navigate this downturn and still have a company with jobs available for our people to return to when this crisis ends. We will continue to navigate these challenging circumstances with our customers and employees in mind and we believe the initiatives we've taken reflect the best course of action at this time."
The memo detailed the dates and details of changes under the heading "We're All In This Together."
Here are the changes it announced:
- All PTO beyond March 23 is suspended through June 30, except where required by state law.
- Severance pay for terminated employees is suspended from April 1 through June 30.
- Disaster pay, originally intended for employees who were affected by the coronavirus, is suspended starting March 23.
- As of Wednesday, the company's 401(k) match is suspended.
- Store hours will be reduced based on store performance. Stores with worse performance will be open for a shorter amount of time.
- An unspecified amount of retail sales associates will be put on furlough based on their performance. Employees under quarantine may also be placed on furlough.
- Some operations and corporate employees will also be placed on furlough.
- The company will pay for the employee and the company portion of all benefits for employees on furlough, including health benefits.
- Furloughed employees can claim unemployment and the company will not contest it.
- Read more:
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- A wildly popular conspiracy theory about why there are so many Mattress Firm stores is starting to sound less crazy