Retail

Acquisition Rumors Floating Around Birchbox

Subscription boxes have been all the rage with millennials for the last few years. One of the initial pioneers of this sector of retail is rumored to be in acquisition talks. Birchbox, which delivers curated beauty product samples to its customers, has been in talks with several retailers, which includes the likes of Walmart.

The rumor floating around is that Walmart’s U.S. eCommerce Chief Marc Lore and Birchbox’s Co-Founder and CEO Katia Beauchamp have been discussing a deal, but there has been no news to confirm anything at this time. With over $80 million in investor funding and an undisclosed secured venture debt, Birchbox is prime for an acquisition.

To help rework its debt that’s due early next year, Birchbox is working its way through several offers to help take off the pressure for a full-on sale of the cosmetics company. In addition to this debt, Birchbox had two rounds of layoffs last year and has struggled to stay afloat. With a $15 million infusion of cash last summer, Birchbox is looking to grow its subscription box business.

The idea behind Birchbox is that a $10 monthly fee is paid so people can try out new beauty products. The hope is that consumers will like certain products and make full-sized purchases on the website. At this time, a mere 35 percent of the company’s revenue comes from full-priced eCommerce sales of cosmetics on its website and in its two physical locations.

Athough the company is looking to avoid a sale, sources have told Recode that it may be inevitable that Birchbox will have to sell itself. While neither Birchbox nor Walmart have confirmed forward movement with an acquisition, Walmart’s eCommerce chief has been buying up companies left and right, including Bonobos and ModCloth. With its acquisition of Jet.com, Walmart is looking for ways to continually grow its eCommerce presence with millennials, and Birchbox may be a missing piece to the puzzle.

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