Kate Spade pops on report it's looking into selling itself
Shares of retailer Kate Spade are spiking more than 19% following a Dow Jones report that the retailer is working with investment banks on a possible sale of the firm.
The report comes just about six weeks after New York-based hedge fund Caerus Investors asked the board to consider a sale. "We have become increasingly frustrated by management's inability to achieve profit margins comparable to industry peers," Caerus' founder, Ward Davis, and managing partner, Brian Agnew, wrote."Given the market's lack of faith in the current management team, as evidenced by the 63% decline in the shares since the intraday high on August 11th, 2014, we believe the best path for enhancing shareholder value is to pursue a sale of the company."
The retail environment has been tough for Kate Spade. The company reported third quarter results on November 2 that beat on earnings and missed on revenue. At the time, CEO Craig Leavitt cited "several macroeconomic factors, including a challenging retail environment and continuing tourist headwinds," as reasons for the disappointing bottom line results. Leavitt also cited lower tourist traffic after the firm's second-quarter earnings miss.
