In an increasingly difficult environment for luxury brands, Kate Spade is exploring a potential sale at the behest of an activist investor, according to The Wall Street Journal. The brand, which currently has a market value of approximately $2.3 billion, plans to kick off a formal auction process for the company in January, a Bloomberg report added.
As many as six companies — including other retailers — are interested in bidding for the luxury handbag designer. Coach, which had sought to acquire the luxury fashion brand Burberry before the latter rejected the offer, could be a bidder given its similar position as handbag seller. Additionally, consolidation between two well-known players could give a combined brand pricing advantages.
In November 2016, hedge fund Caerus Investors called for the company to consider a sale in order to help improve profit margins. The firm noted a sharp decline in the company’s shares since the summer of 2014 and said the market had lost faith in management.
Caerus had a 0.03% stake in Kate Spade as of September 2015, according to a regulatory filing, but has not provided details of its shareholding since then.
Nasty Gal May Go On Auction Block
While Kate Spade’s future is sure to capture the most attention in fashion circles, it’s not the only industry player exploring a sale to start 2017. Two months after filing for bankruptcy, Nasty Gal is planning to seek permission to launch an auction to sell the brand to UK-based fashion retailer Boohoo.
Boohoo confirmed it will bid $20 million for Nasty Gal’s intellectual property assets and customer lists, leaving behind the brand’s two brick-and-mortar stores and supply chain infrastructure.
The auction is expected to take place in early February, with bidding procedures to be approved by the U.S. Bankruptcy Court for the Central District of California on or about Jan. 5, 2017. Boohoo’s bid may not be successful if Nasty Gal receives higher or more favorable offers during this process.
Nasty Gal will continue operating as usual throughout the auction process and sale, which is expected to close by the end of February 2017.