
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: WEDNESDAY, May 5, 1993                   TAG: 9305050097
SECTION: BUSINESS                    PAGE: B6   EDITION: METRO 
SOURCE: SANDRA BROWN KELLY STAFF WRITER
DATELINE:                                 LENGTH: Medium

IBM SUES FINANCIALLY AILING DIET CENTERS RIVAL WOOS NUTRI-SYSTEM'S CLIENTS

The owner of three Western Virginia Nutri-System Diet Center franchises said Tuesday her centers are operating as usual despite financial troubles at the national company and a bone-picking advertising campaign by a major competitor.

Janice Pitrolo, who has centers in Roanoke, Christiansburg and Lynchburg, said she has been told there are enough diet products in the warehouse to supply the franchise centers while the corporation, Nutri-System Inc., goes through a restructuring.

IBM, meanwhile, has slapped the reeling Nutri-System with a $7.3 million lawsuit for failure to make payments on leased computers.

The suit, filed late Tuesday in U.S. District Court in Philadelphia, charged that Nutri/System had made no payments since December on about 500 computer systems used in about 250 company-owned weight-loss centers nationwide, and refused to allow IBM to repossess the systems as specified in the lease.

The telephone was not answered Tuesday at Nutri-System headquarters in Blue Bell, Pa. The company closed the headquarters and 283 centers Thursday after banks seized its cash and bank accounts.

Nutri-System's main competitor, Jenny Craig Weight Loss Centres Inc., has bought quarter-page advertisements in Sunday and Monday newspapers, including the Roanoke Times & World-News, and television time to deliver an open letter to Nutri-System clients.

The ads from Del Mar, Calif.-based Jenny Craig invited Nutri-System customers "to continue your program with Jenny Craig with no additional service fee."

Pitrolo said it is misleading for the ads to run in the Roanoke area, because there are no corporate-owned Nutri-System centers here and her clients are being served. She said her company called its clients to reassure them that the franchises aren't affected. Pitrolo has owned the Western Virginia centers for 13 years and opened the Lynchburg center five years ago. There are 857 franchise centers.

A board member of Nutri-System Inc. said Friday the company is being sold to Philadelphia investors, but the sale has been delayed because of the pending divorces of "one or two" of the three shareholders and the need to regain control of the stock from their estranged wives.

Jenny Craig owns and franchises about 700 centers in the United States. Jenny Craig's stock closed Tuesday at $16.12 1/2 a share, up 37 1/2 cents. Since the Nutri-System closings, Jenny Craig stock has increased more than $1 a share.

The Knight-Ridder news service also contributed to this story.

by CNB