Subscription-box business Birchbox has confirmed to a number of media outlets that the company plans to lay off 25% of its staff; that includes nearly half of the employees at the company's New York corporate offices, according to a WARN notice filed with the Department of Labor in New York.
The news comes on the heels of Birchbox selling its French business to the original founders and Otium Capital. That business is now operating as a separate entity from the rest of the company with a license to use the Birchbox brand in France for 18 months as it rebrands.
Birchbox Chief Executive Officer Katia Beauchamp said in a statement to WWD that the company is looking to create more synergies across markets and is consolidating globally. “To reduce redundancies across the U.S., U.K. and Spain, we made the difficult decision to downsize our team by about 25 percent globally. This includes plans to move some of our U.K. operations to Spain, managing the U.K. market from the Barcelona office.”
“In 2019, we significantly improved the fundamentals of our business, increasing the value of every subscriber and meaningfully improving the unit economics of the business. We introduced a tiered pricing structure that incentivized longer-term commitments; as a result, our subscriber base is smaller, but we doubled revenue per subscriber, decreased churn to record-low levels, increased margin on our monthly subscription, and saw a [four times] increase in customers signing up for 12-month subscriptions,” Beauchamp continued.
“Building on that progress, we believe creating more savings through these operating efficiencies is the best path forward for the company,” she said.
The business was first to the subscription beauty-box business but gradually struggled as other entrants hit the market and investors began to demand profitability, leading to 15% reduction of staff and suspension of operations in Canada. Since 2018 Birchbox has been majority-owned by Viking Global Investors, a venture firm, and since then the company has closed its stand-alone store, raised prices, and partnered with Walgreens for several shop-in-shops.
