The Best Beauty Subscription Company Is Going Out Of Business?
Popular makeup subscription service Birchbox is feeling a financial strain, even though they are one of the original makeup subscription services.
This article is more than 2 years old
Subscription boxes have taken the retail world by storm in recent years. Customers love the idea of curated items arriving on their doorstep every month. So the news that Birchbox, the original beauty subscription box, is struggling comes as a surprise.
Katia Beauchamp and Hayley Barna founded Birchbox in 2010. It started as the first beauty subscription box and quickly took off. At the company’s height, it even had a brick-and-mortar storefront in SoHo, New York.
A monthly subscription to Birchbox will only set you back $15. But you get five new samples every month for that investment. Customers can also peruse the online shop and add full-size items to their shipments.
Birchbox was such a hit amongst consumers that they even snagged a deal with Walgreens. The goal was “to bring prestige beauty to the drugstore giant’s shelves,” according to Yahoo!. The company continued to thrive for many years.
Then the company started to struggle. In 2020, Birchbox leadership laid off 44 employees. They only had 94 New York employees at the time.
In 2021, FemTec Health came to the failing company’s rescue. They purchased it and pumped in $30 million to try and help revive Birchbox. That was enough to see them through briefly.
But not enough to stave off news of financial trouble. Recent revenue projections show a sharp drop. The company adjusted its expectations from $74 million down to $47 million.
And that has its parent company, FemTech, concerned. WWD reported that they sent a blunt letter to creditors this week. It stated, “we believe, in the best interests of Birchbox and the entire FMTC family of companies spanning the U.S. and Europe, a Chapter 11 or some equivalent structure may be necessary.”
Creditors also received news that they could opt-in to shares of FemTec Health instead of Birchbox. However, FemTec was clear that it could not negotiate with everyone. They said, “we cannot negotiate separate deals with more than 150 creditors.”
“If we can come to an agreement regarding this new Class A Preferred Stock, FMTC will commit to continue to building Birchbox,” the letter continued. That certainly sounds like closing the subscription box company is within the realm of possibilities. And that would be devastating news to its loyal fans.
However, Birch Box is not alone in its financial woes. The beauty business is struggling in general. And several other companies have had to shutter their doors.
One of the most notable companies to do so is Lilah B.. The popular makeup brand announced that it was going out of business last month. It is sold at stores like Neiman Marcus, Nordstrom, and Sephora.
Additionally, Forma Brands is strongly considering Chapter 11 and other restructuring options. They are the parent company of well-known brands, including Morphe, Playa Beauty, and Jaclyn Cosmetics. The company has yet to decide its next steps.
But it will likely follow in Birchbox’s footsteps. And while this is disappointing news to beauty products customers, it does not necessarily mean they will go out of business. With any luck, your favorite beauty supplies will still arrive in the mail each month.
