Birchbox, one of the earliest direct-to-consumer brands, is laying off 25% of its global staff.
Many of the reductions will occur across Birchbox’s international offices in the U.K and Spain, with plans to move a portion of its U.K operations to Spain. However, in New York, 44 of its 94 employees will also be let go, with all layoffs completed by May 30, according to a New York State Department of Labor notice.
“We are creating more synergy across markets and consolidating globally,” said Katia Beauchamp, CEO and co-founder of Birchbox, in an emailed statement.
This isn’t the first time Birchbox has undergone layoffs; the brand previously went through multiple rounds in 2016. In 2018, Viking Global acquired majority ownership of Birchbox, according to Recode. Later in 2018, Walgreens acquired a minority stake in the brand as well, launching mini Birchbox experiences in its stores. Birchbox had previously raised $90 million in venture capital, with a valuation of about $500 million, but in 2016 started to face trouble after failing to secure another funding round.
In recent years, Birchbox tried to acquire more customers through other means, such as rebranding its Birchbox Men’s box to Birchbox Grooming to become more inclusive, as well as expanding into linear and OTT advertising. But Birchbox has faced competitors for years, particularly in its core business of subscription boxes. Companies from Ipsy to Sephora to Target and even Allure magazine have all released subscription beauty services in the years after Birchbox’s launch in 2010.
“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,” Beauchamp said in a statement. “We introduced tiered pricing that incentivized longer-term commitments; as a result, our subscriber base is smaller but 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.
“Building on that progress, we believe creating more savings through these operating efficiencies is the best path forward for the company.”
The news arrives after a tough week for DTC brands. Casper, a DTC mattress brand, went public on Feb. 6, with shares listed at $14.50—bringing its value to about $468 million, as opposed to its $1.1 billion valuation. At the time of writing, Casper’s share price is close to $12. The FTC also sued to block Edgewell Personal Care’s acquisition of Harry’s.