By and  on September 19, 2005

NEW YORK — Kate Spade LLC said Friday the Neiman Marcus Group, which owns 56 percent of the accessories company, has begun to explore "strategic alternatives," including a possible sale.

This confirms a report in WWD on July 25 that Neiman's might look to sell the firm. NMG purchased a majority interest in Kate Spade, founded in 1993, in 1999 for $33.6 million from Alex Noel Inc. Texas Pacific Group and Warburg Pincus LLC, two equity firms, bought Neiman's for $5.1 billion in May.

Andy Spade, chief executive officer of Kate Spade, said in a statement, "At this stage in our growth, it makes good business sense for the company to explore all options available. We are very excited and optimistic about the future of Kate Spade."

The companies said in a joint statement that "there could be no assurance that this process will result in any specific transaction."

Spade, whose core competencies are handbags and shoes, has been expanding relentlessly. In July, Spade announced it would increase its signature retail chain to as many as 50 stores within three to five years. The company now has 20 boutiques in the U.S. and nine in Asia.

Spade also continues to enter new categories, including ready-to-wear, infants' apparel and accessories and stationery. The company is already in tabletop; men's accessories, with its Jack Spade line; eyewear, and beauty.

"Kate Spade is still a very good brand. It would be an interesting acquisition for any number of players," said an analyst for an institutional investment house. "The brand has great product and its retail concept is where [I see] its growth potential."

Kate Spade will generate about $275 million in retail sales for the year ended July 31, a 25 percent increase compared with the previous year, according to industry estimates. The company expects a 40 percent increase in retail sales in the next fiscal year, 35 percent from new stores.

On the wholesale side, Kate Spade sells to stores such as Bloomingdale's, Saks Fifth Avenue, Neiman's and Bergdorf Goodman.

Kal Ruttenstein, senior vice president for fashion direction at Bloomingdale's, told WWD in July that he feels positive about the future of the Kate Spade business."Our Kate Spade business has been good for a long time," he said. "Our business increased, especially since she started working on different categories like tabletop and bedding."

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