Newly created retail giant Sears Holdings Corp will cut down on its 400,000 employees' pay and benefits next year, according to a report in the Detroit Free Press.

The company was created last week after leading US businesses Sears, Roebuck and Co and Kmart Holding Corp merged in a $12.3 billion deal.

According to the Associated Press, Sears' workers were sent an e-mail on Monday telling them that alterations to benefits would be announced next month, to be put into place next year.

The e-mail is also said to have stated that layoff announcements would be made in April.

The merger between the two companies - which has created the US's third-biggest retailer - was announced in November last year.
  
Sears has predicted that the merger should lead to savings of $500 million within the coming three years.