Posted on Sat, Sep. 11, 2004

Atkins Nutritionals trimming work force

By SIMONA COVEL and DAVID TOLL

Dow Jones Newswires


NEW YORK — Atkins Nutritionals Inc., the company founded by the doctor credited with starting the low-carb diet phenomenon, is laying off workers.

Richard Rothstein, a spokesman for Ronkonkoma, N.Y.- based Atkins, which is privately held and currently employs 370 people, would not say how many positions will be cut.

“It’s an ongoing process that began this week and will be resolved in the near future,” Rothstein said.

The cuts are the latest sign of distress for the diet company, which bears the name of Dr. Robert Atkins. Its diet peaked last year and has faced criticism from health officials as well as mounting competition from other diets.

In the second quarter, Atkins wrote off some of its inventory as the food expired, a move that weighed on the company’s profits, said Ernest K. Jacquet, managing director of Parthenon Capital, a private equity firm that has held a majority stake in Atkins since last fall.

As a result of that, Atkins “went from being very profitable to not making money,” Jacquet said.

He said, however, that Atkins is meeting Parthenon’s financial expectations and he expects the company to show a profit for the year.

Jacquet said the layoffs are a result of Atkins’ plan to outsource some of its sales to a third-party broker.

As a privately held company, Atkins isn’t required to release financial statements or file reports with the Securities and Exchange Commission.

In the past week, there have been cries from investors who own pieces of Atkins’ debt.

The company’s $323.5 million loans plummeted in secondary trading, with bids reported as low as 70 cents on the dollar. Steep price declines are indicative of investors’ concerns over the company’s prospects.

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