Kate Spade says it is exploring its options

Kate Spade says it is exploring its options

Kate Spade may be up for sale after the apparel and accessories business acknowledged it is exploring options as it revealed higher fourth-quarter earnings and sales.

The company had remained silent earlier this year on reports it was exploring a sale amid allegations of potential insider trading. However, in a statement yesterday (16 February) the company said it had appointed financial advisors to conduct a process to "explore and evaluate strategic alternatives to further enhance shareholder value".

"The board plans to proceed in a timely manner, but has not set a definitive timetable for completion of this process," it explained. "There can be no assurance that this review process will result in a transaction or other strategic alternative of any kind."

Kate Spade said it will not disclose developments or provide updates on the progress or status of the process until it deems it appropriate or required.

The news came has the company revealed net earnings of US$87m in the three months to the end of December, up from $62m a year earlier. For the full year, earnings jumped to $153.6m from $17.1m.

Gross margin for the quarter, however, narrowed to 59.2% from 60.2%, and for the full year narrowed to 59.9% from 60.7%.

Net sales in the fourth quarter were up 9.8% to $471m, while direct-to-consumer comparable sales growth reached 9.3%. For the full year, net sales climbed 11.2% to $1.38bn.

"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 CEO Craig 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 maximising value and are exploring strategic alternatives that are in the best interests of our company and shareholders."