Just as foreclosures account for a record share of the real estate market, foreclosed companies are also one of the few areas of activity in the private equity space.
Sun Capital Partners took Stila Cosmetics private back in 2006, but defaulted on loans from Wachovia and CIT Group (NYSE: CIT) -- leading those lenders to foreclose on the company.
Now Stila has been sold to New York private equity firm Patriarch Partners for an undisclosed sum sure to be considerably lower than what Sun Capital paid when it bought the brand from Estee Lauder (NYSE: EL), which originally purchased the company from founder Jeanine Lobell back in 1999.
The Wall Street Journal reports (subscription required) that "Stila, which maintains a cult following with products such as brown sugar lip gloss and pale seafoam blue eyeshadow, joins other high-end niche beauty lines struggling to tempt cash-strapped shoppers. The brand is sold in department stores and through specialty retailers such as Sephora."
Leonard Lauder once coined the term "Lipstick Indicator" to describe the countercyclical nature of lipstick sales: As people cut back on big ticket items, they turn to affordable pick-me-ups like drugstore cosmetics. Because it operates at the relatively high-end of the cosmetics market, Stila has struggled with tradedown customers who are heading to CVS instead of Sephora to pick up their cosmetics.
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