Wowed by its celebrity make-up artist founder, sleek packaging and quirky image, Estee Lauder Cos. Inc. squeezed out other bidders to snatch up Los Angeles company Stila Cosmetics Inc. for around $25 million in 1999.
But Stila’s revenues have been relatively static since making an estimated $26 million the year of its acquisition, and Lauder’s patience with the brand ran out. The company announced last week it sold Stila to an affiliate of Boca Raton, Fla.-based Sun Capital Partners Inc.
Jane McKellar, former managing director of Elizabeth Arden Inc. in Australia, is taking over Stila’s management. Kim Waite, a spokeswoman for Stila, said McKellar is moving to L.A. for the job: her cats arrived on Wednesday. Other than that, she said staff changes aren’t expected at the local headquarters.
“Jane McKellar and her colleagues are talented, experienced executives who are passionate about cosmetics and the Stila brand,” William Lauder, president and chief executive of Estee Lauder, said in a statement. “We believe this bodes well for the brand’s future. At the same time, we are pleased that our company has taken this important step in our drive to optimize our portfolio of brands.”
Lauder is holding onto MAC and Bobbi Brown, two brands started by make-up artists that it purchased in the 1990s, a decade that saw the company expand aggressively. Now, Lauder is pulling back from upstarts, and William Lauder has emphasized that he’d rather not coddle brands making less than $100 million.
Jeanine Lobell, whose client list includes Natalie Portman and Diane Lane, founded Stila here as a specialty brand in 1994. Under the new ownership, Waite said Stila will return to its roots and move away from a wider distribution in department stores.
Dressing Up
BCBG has been piling up stores with a purpose to set itself up for a lucrative public offering.
Max Azria, founder and chief executive of Vernon-based AZ3 Inc., better known as clothier BCBG, has told trade publication Women’s Wear Daily that an IPO is expected at the end of this year or the beginning of next year. BCBG has brought on financial advisors from Goldman Sachs Group Inc. and Citigroup Inc.
“I have in my head a plan and a schedule, but I am keeping the freedom to move on it at the right time. It would depend on market receptivity of an apparel IPO,” Azria said. He added that BCBG is on pace to reach $1 billion in sales this year.
Over the past several months, BCBG has been aggressively expanding its store base. In February, the company swooped up New York-based G+G Retail Inc.’s over 550 stores in a bankruptcy auction in which it bested rival Foothill Ranch-based Wet Seal Inc.
Before that purchase, BCBG looked overseas to bulk up its retailing. The company gained 355 stores last year when it added French retail chain Alain Monoukian and Spanish retail chain Don Algodon to its portfolio.
Despite all the acquisition activity, BCBG hasn’t been ignoring its namesake chain. The company plans to add 50 more stores this year to its already 215 units in the U.S., according to the Women’s Wear Daily report.
Private Sale
Innovo Group Inc. may not have sold itself yet, but a piece of the company will soon be gone.
The Commerce-based apparel maker is dispatching its private label subsidiary called Innovo Azteca Apparel Inc. New York-based Cygne Designs Inc. has agreed to pick it up for $10.4 million.
The deal is subject to stockholder approval, just a tiny bump in the road for struggling Innovo. The company has already hired Piper Jaffray & Co. to help it evaluate “strategic alternatives” and is trying to rid itself of assets like the private label business that have weighed on its financials.
“During the past several months we have made important progress toward streamlining our operations, highlighted by the pending sale of our private label business,” said Marc Crossman, interim chief executive, in a statement.
Rather than continuing to patch up its ailing parts, Innovo is instead concentrating on growing its Joe’s Jeans denim division. While Joe’s for the first quarter had positive cash flow of $3.9 million, Innovo as a whole posted a $3.7 million loss, wider than the $616,000 loss in the year-ago period.
Hotel Figures
After a strong January, Los Angeles County hotels continued to see room rates increases in February, while the average occupancy rate reversed course, according to data released by hospitality consulting firm PKF Consulting.
Across the county, the average occupancy rate was 78.6 percent, down from 79.1 percent from the same period last year. In January, the average occupancy rate clocked in at 76 percent, up from 73.6 last year.
West Hollywood hotels had the highest February occupancy rate, at 84.4 percent. After a topping other county hotels in January, hotels in the airport area stayed full with an 84.2 percent occupancy rate. Hollywood hotels followed closely at 81.3 percent.
Countywide, the average amount for a night stay increased to slightly under $145 in February, compared to $135 for the same month last year. In January, guests paid, on average, $142.
Beverly Hills hotels remained the most expensive in February, with a nearly $371 average daily room rate. No other area came close to those pricey rooms, although rooms in Santa Monica and other West L.A. locations did go for around $250 in February.
Meanwhile, the Los Angeles County hotel market last year was cool compared to the blazing California market in which the hotel sales volume hit a record high, according to data released by Atlas Hospitality Group.
Locally, hotel sales increased 4.2 percent to 75, while the dollar volume was up over 61 percent to slightly more than $1.5 billion. In the state, the sales volume was up over 105 percent to 367, with the dollar volume topping $4.5 billion.
The largest hotel to sell last year in Los Angeles County was the 1,011-room Marriott Los Angeles Airport, while the most expensive hotel was the 728-room Century Plaza Hotel & Tower, which fetched $293 million.
Staff reporter Rachel Brown can be reached at (323) 549-5225, ext. 224, or at
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