Jenny Craig became a dieting guru by selling low-calorie meals and sensible advice. But lately, the company that bears her name has been acting like a frustrated dieter who will try almost any strategy.
In January, the nation's second-largest operator of weight-loss centers stopped requiring clients to pay as much as $75 a week for Jenny's Cuisine, the full-course meals that provided 90 percent of the company's revenue. Calorie counters were permitted to load up instead on Jenny's new line of shakes, snack bars and other "on-the-go" diet foods.
In March, the company's shares spiked on news that Jenny Craig would sell nutritional supplements on its Web site.
But despite these innovations, profit for the fiscal third quarter ended March 31 fell 53 percent from a year earlier. Soon, Jenny Craig Inc. was back hawking old Jenny's Cuisine standbys. And, after disappointing initial sales at its Web site, the company announced in May an agreement to link its site to Women.com, a larger, more elaborate Web portal, providing sponsorship and, down the road, content.
Jenny Craig's president, Phil Voluck, acknowledges the company has tried a lot of different approaches recently. What's next? Trying to work the new fat-blocking drug Xenical into the company's weight-loss regimen, and Jenny's Fit in 15 on the Health Network, a new cable channel.
Voluck blames most of his bottom-line blues on troubles with Jenny's Cuisine. Some customers balk at the expense and inconvenience of stocking up on the prepared foods.
The company's problems also reflect the upheaval confronting nearly every weight-loss business: increased competition from Internet-based diet programs and the hot new drug Xenical, as well as diet books and exercise fads such as Tae-Bo.
Another problem the company had was with Redux and the related drug cocktail "fen-phen." Jenny Craig first resisted the diet-drug craze that peaked in 1997. But as profits fell, executives belatedly gave in and offered fen-phen as an adjunct to the Jenny Craig regimen, contracting with physicians to examine clients and prescribe the drugs. A few months later, the Food and Drug Administration pulled fenfluramine (the fen half of fen-phen) from the market, citing evidence that it may have scarred users' heart valves irreversibly and sometimes fatally. The company, it turned out, had changed course just long enough to expose its shareholders to the risk of liability suits.
Now, Jenny Craig is again agonizing over how to respond to Hoffman-LaRoche Inc.'s Xenical, a highly publicized diet pill that generated more than 100,000 prescriptions in its first month on sale.
Voluck says his team has contacted Hoffman-LaRoche, the U.S. unit of Swiss pharmaceutical giant Roche Holding AG, to try to persuade it to urge doctors to prescribe the drug in combination with the Jenny Craig plan.
Jenny Craig stock closed unchanged at $2.93} Friday.