Kate Spade Signals Sale Possibility, Issues Positive Q4 Results

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Photo credit: Kate Spade

Kate Spade announced it’s exploring “strategic alternatives” in its earnings report today. The statement confirms industry chatter which has speculated the firm is looking for a buyer—possibly from competitors like Michael Kors or Coach.

Shares at the company were up by 6.8% in premarket trading on the news.

Takeover talk began in November when Caerus Investors, an investor in the firm, issued a letter to the board, asking it to consider selling the company.

The company said it’s working with Perella Weinberg Partners as its financial advisor and Paul, Weiss, Rifkind, Wharton & Garrison to assess alternatives, though no further details were or will be provided as possible deals are in the works.

“Our solid fourth quarter and fiscal year performance demonstrate the strength of our differentiated business model, as we continued to gain market share and deliver strong growth despite a challenging retail environment. In 2016, we further strengthened our handbag portfolio, introduced new categories to our casual ready-to-wear classifications, and thoughtfully expanded our global store base, opening 52 net new owned and partner-operated stores,” said Craig A. Leavitt, chief executive officer of Kate Spade & Company. “At the same time, we remain committed to maximizing value and are exploring strategic alternatives that are in the best interests of our company and shareholders.”

Kate Spade reported a net sales increase of 9.8% to $471 million for the fourth quarter, ended Dec. 31, 2016. Comp stores sales, including e-commerce, increased by 9.3%.

The company’s North American net sales were up 9.5% to $407 million compared to the same period in 2015, and international business reached $59 million, an increase of 12.4%.

Year-on-year net sales increased by 11.2% to $1.38 billion.

Net income for the quarter reached $86 million and $154 million for the year.


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