Kate Spade shares jump on report company may sell itself

Kate Spade & Co. shares surged the most in more than two years after Dow Jones reported that the luxury handbag maker is working with bankers to explore a sale of the company.

The company has been under pressure from shareholders to find an acquirer amid a failure to boost profit margins. It is working with an investment bank and has reached out to potential buyers, Dow Jones reported Wednesday, citing people familiar with the matter.

Kate Spade shares surged as much as 21 percent to $17.52 in New York, the biggest intraday gain since November 2014. The stock had dropped 18 percent this year through Tuesday.

Kate Spade spokeswoman Emily Garbaccio declined to confirm or deny the report. She said in an email that the company doesn’t comment “on industry rumors or speculation.”

Last month, Caerus Investors sent a letter to the company saying shareholders were “incredibly frustrated” with its performance and that investors would be better off if it was sold to an acquirer who could better manage the business.

Like competitors Coach and Michael Kors Holdings, Kate Spade has been working to reduce its reliance on promotions and sell more products at full price to maintain its brand’s image. The U.S. luxury industry has suffered from falling sales in recent years, caused by a decline in mall traffic and the rise of e-commerce. The industry’s weakness has fueled speculation that major brands have considered combining, rather than fighting it out alone.

Caerus has said it first invested in Kate Spade in 2009, when it was owned by parent company Liz Claiborne. It didn’t disclose the size of its stake when it released the letter last month.