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Jenny Craig tells employees it will shut its doors after four decades

Jenny Craig will close its doors after four decades in the weight loss and nutrition business, according to internal communications to employees reviewed by NBC News.

In an email sent to employees late Tuesday, the company said it will close “due to its inability to secure additional financing.” Jenny Craig corporate and salaried field employees’ last day will be Friday, and hourly center employees’ last day working was Tuesday. The company operated about 500 company-owned and franchised stores in the United States and Canada, according to H.I.G. Capital when it acquired Jenny Craig for an undisclosed amount in April 2019. It now employs more than 1,000 people.

Last week, corporate employees at the company’s Carlsbad, California, office received a WARN Act notice that the company would be closing the office June 24, but may close as soon as Friday. A FAQ was also sent by Jenny Craig to employees, explaining that it would wind down physical operations to transition to an e-commerce model.

For the past two weeks, Jenny Craig had been running out of money as it searched for a buyer. Bloomberg Law reported last month that the company was pursuing a sale. Two current Jenny Craig corporate employees say they fear the company will file for bankruptcy by the end of the week.

Neither Jenny Craig nor H.I.G. Capital, a $55 billion private equity firm, have responded to requests for comment.

Jenny Craig was founded in 1983 to help people lose weight, and the brand became a household name for its weight loss program. The program provided special menus designed by chefs and nutritionists to help consumers lose weight. The company recruited celebrities to front the brand, including actors Kirstie Alley, Valerie Bertinelli and Jason Alexander, and singer-songwriter Mariah Carey.

The company has faced increased competition recently after a handful of drugs that can help people lose weight, such as Wegovy, Rybelsus and Ozempic, hit the market promising to help consumers shed pounds. The core of Jenny Craig’s client-facing operations happened mostly at its physical centers, according to employees, but consumers generally have been pivoting more toward online services in recent years.

Last week after reports about the potential layoffs, a Jenny Craig spokesperson told NBC News that the company “is embarking on the next phase of our business to evolve with the changing landscape of today’s consumers. Like many other companies, we’re currently transitioning from a brick-and-mortar retail business to a customer-friendly, e-commerce driven model. We will have more details to share in the coming weeks as our plans are solidified.”

There is no indication in the most recent communication to employees that the transition to an e-commerce model will still happen.

Jenny Craig employees say there was no indication preceding the past two weeks that the company was spiraling. One month ago, the company was posting job openings on LinkedIn, and one employee says she was given a raise and new training just a few weeks prior.

Jenny Craig’s policy is to provide severance pay to laid-off employees “based on job level and tenure with the company,” according to the FAQ document it sent out last week.

“However, at this time, it is highly unlikely that these will be paid,” it said.

The company told employees in the termination letter that they will receive a ‘final paycheck, including your full compensation earned through your last day of work and all accrued, unused paid time off.’

This post appeared first on NBC NEWS

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