Birchbox is scaling back its growth plans as money becomes tight

Katia beauchampCindy Ord / Getty ImagesBirchbox CEO Katia Beauchamp.

Birchbox, a startup which offers subscriptions to boxes of beauty products, is changing course.

The New York City-based company is laying off employees and putting expansion plans on hold as it faces a lack of new funding and competition from other beauty box companies, the Wall Street Journal reports.

Birchbox was previously planning to open three more physical stores in the U.S. — it has one brick-and-mortar location in SoHo — and had planned to expand into other markets, like China. Those plans are now on hold. Birchbox previously occupied two floors in its New York headquarters and has moved on just one floor after cutting 50 of its 300 employees, according to the Journal.

Birchbox is short on cash after recent negotiations with investors fell through, plus investors are more hesitant to invest in private companies unless they can show they’re operating profitably, according to the Journal.

The company was valued at $484 million in 2014, but hasn’t raised money since then.

Birchbox launched what has since become a craze in the beauty industry: boxes that contain curated samples of beauty products are shipped to your home every month for $10.

But over the past few years, Birchbox’s competition has heated up. YouTube star Michelle Phan has created her own line of subscription boxes, beauty retailer Sephora just started its own service for $10 a month, and California-based ipsy has more monthly subscribers — 1.5 million to Birchbox’s 1 million, according to the Journal.

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