After four decades in the weight loss and nutrition business, Jenny Craig is closing its doors, as reported by NBC News. The decision was announced in an email sent to employees, citing the company’s inability to secure additional financing. This marks the end for over 1,000 employees and around 500 company-owned and franchised stores in the United States and Canada.
WARN Act Notice and Transition to E-Commerce
Jenny Craig corporate employees at the Carlsbad, California office received a WARN Act notice last week, informing them of the office’s impending closure on June 24 or possibly earlier. Additionally, the company sent out a FAQ to employees explaining its plans to wind down physical operations and transition to an e-commerce model. However, recent communications to employees do not indicate if this transition will still occur.
Financial Struggles and Bankruptcy Fears
Bloomberg Law reported last month that Jenny Craig had been seeking a buyer as it faced financial struggles. Two current corporate employees expressed fears that the company may file for bankruptcy by the end of the week. Neither Jenny Craig nor H.I.G. Capital, the private equity firm that acquired the company in 2019, have responded to requests for comment.
Increased Competition and Changing Industry Landscape
The weight loss company has faced stiff competition in recent years, particularly due to the introduction of weight loss drugs like Wegovy, Rybelsus, and Ozempic. Furthermore, consumers have been gravitating towards online services, challenging Jenny Craig’s predominantly brick-and-mortar business model. In a statement to CNN, a company spokesperson mentioned plans to transition to an e-commerce model but did not disclose the number of closures or affected employees.
Impact on Employees and Severance Pay
Jenny Craig’s policy is to provide severance pay to laid-off employees based on job level and tenure with the company. However, the FAQ document sent to employees last week stated that it is “highly unlikely” that severance pay will be provided.
The Industry’s Shift Towards Prescription Weight Loss Drugs
The weight loss industry is undergoing significant changes as new prescription diabetes drugs, such as Wegovy, Ozempic, and Rybelsus, gain popularity. Traditional weight loss companies are scrambling to adapt, with WW International (formerly WeightWatchers) acquiring telehealth subscription service Sequence to enter the prescription weight loss drug market.
