High-end handbag and apparel maker Kate Spade & Co. is exploring a sale of the company, according to people familiar with the matter, after coming under pressure from an activist shareholder.
The New York company is working with an investment bank and has contacted possible buyers, including other retailers, one of the people said. The process is at an early stage.
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High-end handbag and apparel maker Kate Spade & Co. is exploring a sale of the company, according to people familiar with the matter, after coming under pressure from an activist shareholder.
The New York company is working with an investment bank and has contacted possible buyers, including other retailers, one of the people said. The process is at an early stage.
As of Wednesday morning, Kate Spade had a market value of $1.9 billion. Its value has dropped amid a difficult retail environment.
In November, activist hedge fund Caerus Investors disclosed a small stake in Kate Spade and called for the company to consider a sale. It noted a sharp decline in the company’s shares since the summer of 2014 and said the market had lost faith in management. “We believe the best path for enhancing shareholder value is to pursue a sale of the company,” the fund said then in a letter to the company.
A Kate Spade representative declined to comment Wednesday.
The shares traded as high as about $40 in 2014. They were down slightly at $14.51 midday Wednesday.
Kate Spade could attract a number of potential buyers. Coach Inc. has long been considered a good home for Kate Spade, given Coach’s focus on handbags and accessories and its department-store presence. Coach could also help Kate expand abroad. But, Kate Spade could also attract luxury accessory makers, foreign buyers and buyout firms, in part because of its manageable size.
Kate Spade was once part of Fifth & Pacific Cos., which had formerly been known as Liz Claiborne Inc. While the rest of the retail conglomerate’s brands faltered, Kate became the star of the company.
Liz Claiborne sold off the company’s other brands, such as Juicy Couture and its namesake, until it was left with just Kate Spade. The overall company then was called Kate Spade & Co.
In addition to its own retail stores, the company’s brands, which include men’s label Jack Spade, are sold in department stores such as Saks Fifth Avenue and Nordstrom. It also has outlet stores that sell some of its collection at lower price points.
For the third quarter ending Oct. 1, Kate Spade’s sales increased 14.1% to $317 million.
The retail environment has been challenging, especially for designers that have significant exposure to department stores, where traffic has declined. U.S.-based luxury brands such as Kate Spade are also negatively affected by the strong dollar. Kate Spade’s chief executive said on the company’s latest earnings call that it has had to cope with a decrease in sales in tourist-dependent stores since late last year.
Write to Dana Mattioli at dana.mattioli@wsj.com