Birchbox Said to Weigh Sale to Walmart
Seven years in, the cosmetics retailer and subscription box company is reportedly up for a new owner.
PHOTO CREDIT: Getty Images
The New York-based cosmetics subscription service turned retailer, is reportedly entertaining takeover talks with several retailers, including Walmart, according to Recode, which cited unnamed sources. The reported talks were between Birchbox's CEO and co-founder Katia Beauchamp and Walmart's U.S. e-commerce chief Marc Lore.
Birchbox says it doesn't comment on speculation. Meanwhile, an email to Beauchamp went unreturned. Her co-founder and current Birchbox board member Hayley Barna is on maternity leave. Barna had left the day-to-day at the company in 2015 to become a venture partner at First Round Capital.
The move could help Walmart amp up its e-commerce bench, as it aims to better compete with Amazon. The latter company made headlines recently with its $13.7 billion purchase of Whole Foods.
Should the deal go through, it would be Walmart's sixth e-commerce acquisition in the past 12 months. In addition to Jet.com, Lore's former company, which sold to the retail powerhouse for $3.3 billion in August 2016, Walmart also snapped up men's fashion startup Bonobos, the Millennial women's clothing site Modcloth for as much as $75 million, and the online shoe seller Shoebuy.com for $70 million.
Walmart may also see a future in the subscription box business, although the company has tried its hand with subscription beauty and baby boxes in the past with mixed results.
The acquisition would put Birchbox on sounder financial footing. While the company recently raised another $15 million, it did so under investor pressure to generate profits. With this in mind, in 2016, it throttled expansion plans, as Beauchamp cut staff by 25 percent, to about 230. An acquisition could finally allow the company to fund the opening of new retail stores.
"In 2016, we saw a shift in the market. There was less venture capital deal activity, so it was crucial that we control our destiny by getting to profit and reaccelerating growth," said Beauchamp, in an interview with Inc. for the the July/August 2017 issue of the magazine. "Besides making layoffs, we reduced the cost of putting together a box of beauty products... We also stopped spending on marketing."
-- Contributed reporting from Zoe Henry