New York-based handbag and accessories maker Kate Spade & Co. (NYSE: KATE) said it is exploring strategic alternatives with the assistance of Perella Weinberg Partners as its financial advisor and Paul, Weiss, Rifkind, Wharton & Garrison as its legal counsel.
Kate Spade is said to have been up for sale for a while, and has attracted the interest of potential acquirers such as Coach (NYSE: COH) and Michael Kors Holdings (NYSE: KORS), according to industry experts. The company’s shares closed at $23.19 on February 17, bringing its market capitalization to roughly $3 billion.
The move came as the company released results for the fourth quarter and full year ended December 31, 2016, and as it is facing pressure from New York-based hedge fund Caerus Investors since November.
“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,” said Kate Spade CEO, Craig A. Leavitt. 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. 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.”
“We are pleased to report top-line growth of 14% for the full-year,” said Kate Spade President and COO, George Carrara. “In 2016, we delivered Adjusted EBITDA margin expansion of 220 basis points compared to the prior year, reflecting our ongoing focus on expense management, as well as the benefit of lower annual incentive compensation year-over-year. We generated robust cash flow and ended the year in a strong financial position, and with nearly $500 million in cash.”
For the full year 2016 on a GAAP basis, the company recorded income from continuing operations of $152 million, or $1.17 per diluted share, compared to income from continuing operations for the full year 2015 of $22 million, or $0.17 per diluted share.
Net sales for the full year 2016 were $1.381 billion, an increase of $139 million, or 11.2%, compared to the full year 2015. Net sales for the full year 2016 increased $166 million, or 13.7%, excluding sales for wind-down operations for the full year 2015. Adjusted EBITDA was $261 million for the full year 2016, compared to Adjusted EBITDA, excluding wind-down operations of $203 million for the full year 2015.
Founded in 1993 by Kate Spade and Andy Spade, the company’s four category pillars – women’s, men’s, children’s and home – span demographics, genders and geographies. Known for crisp color, graphic prints and playful sophistication, kate spade new york aims to inspire a more interesting life. The kate spade new york collection includes the Madison Avenue, Broome Street and on purpose labels. Jack Spade offers a timeless and versatile assortment of bags, sportswear and tailored clothing founded on the aesthetic of simple, purposeful design. The company also owns Adelington Design Group, a private brand jewelry design and development group.