Birchbox is laying off 25% of its global employees based in the U.S., the UK and Spain. The job cuts, which include 44 of the 94 employees stationed in the company’s New York headquarters, are expected to help the company cut costs.
The beauty box company, which generates approximately 65% of sales through subscriptions, is familiar with this process, having conducted two rounds of layoffs affecting a total of 80 people in 2016. In 2018, the company sold majority ownership to Viking Global Investors after a deal with QVC fell through.
Although subscription e-Commerce sales rose from $5.8 billion in 2017 to $7.5 billion in 2018, according to McKinsey, Birchbox has seen a slight drop-off in popularity relative to competitors. The beauty box seller dropped from the ninth-most online subscription sales in 2017 to the number 11 spot in 2018.
Nevertheless, Birchbox CEO Katia Beauchamp chose to focus on the positives in a statement accompanying the news: “We doubled individual subscriber value, decreased churn to record-low levels, increased margin on our monthly subscription, and saw a 4X increase in customers signing up for 12-month subscriptions,” said Beauchamp. Beauchamp did note that Birchbox has an overall smaller subscriber base than last year.
Last year, Birchbox raised its basic monthly subscription rate from $10 to $15 and introduced a tiered pricing structure based on monthly, six-month and yearly subscriptions. The company has attempted expansion in other venues, namely launching in-store beauty experiences in 12 Walgreens stores before escalating the partnership with 500 pop-ups throughout the holiday season. Additionally, the company rebranded its BirchboxMan brand to Birchbox Grooming as it sought to be more inclusive.
The layoffs come less than a month after Birchbox sold its France subsidiary to its Co-Founders, CEO Quentin Reygrobellet and COO Martin Balas. In partnership with Otium Capital Investment, Reygrobellet and Balas now operate Birchbox France as an independent company.
Birchbox France has been profitable since 2016, according to a spokesperson. In 2020, the company plans to expand in Europe, and also is working to deploy premium services by the end of the year.
France isn’t the first international market Birchbox has exited; the company shuttered its Canadian operations in 2016.