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Beauty Retailer Birchbox Cuts 25% of Workforce to Reduce Costs

Kim Bhasin and Matthew Boyle

(Bloomberg) -- Birchbox Inc. will terminate about 25% of its employees worldwide as the beauty products seller cuts costs.

The cuts come as Birchbox, which sends members a box of items like mascara, exfoliators and dry shampoos for $13 to $15 a month, is working to become more efficient after a hedge fund bought a majority stake in 2018.

Chief Executive Officer Katia Beauchamp said the New York-based company improved its margins and reduced customer turnover, a key concern for subscription services like Birchbox. She said the business has seen a fourfold increase in customers signing up for annual subscriptions, which cost less, rather than shorter-term options.

Still, that customer base has shrunk after the company increased its price from $10 almost a year ago to a range based on the subscription period, though the value of each shopper rose for the company. As of last year, Birchbox had more than 1 million subscribers who receive the monthly boxes.

“Building on that progress, we believe creating more savings through these operating efficiencies is the best path forward for the company,” Beauchamp said in a statement.

As part of the reductions, the company will move some operations from the U.K. to Spain, she said. Birchbox sold its division in France in January.

Heralded as one of the pioneers of the subscription box craze, the startup charged onto the scene in 2010, led by Harvard graduates Beauchamp and Hayley Barna. Hedge fund Viking Global Investors acquired a majority stake in Birchbox two years ago, after agreeing to invest about $15 million to buy out other venture capital investors.

The company declined to say how many workers would be let go globally. Birchbox had a staff of about 220 after a separate round of cuts in 2016. At least 44 employees will be affected in New York, according to a a notice filed with the state labor department.

To contact the reporters on this story: Kim Bhasin in New York at kbhasin4@bloomberg.net;Matthew Boyle in New York at mboyle20@bloomberg.net

To contact the editors responsible for this story: Sally Bakewell at sbakewell1@bloomberg.net, Linus Chua, Cécile Daurat

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