Note: Company Filings And Bloomberg Consensus Estimates. (Graphic: Business Wire)
Caerus Investors, a New York City-based asset management firm focused on investing in consumer-related equities has sent a constructive letter to Nancy Karch, Chairman of the Board of Directors of Kate Spade (NYSE:KATE)...
Caerus Investors, a New York City-based asset management firm focused on investing in consumer-related equities has sent a constructive letter to Nancy Karch, Chairman of the Board of Directors of Kate Spade (NYSE:KATE) urging the Board to take steps to realize shareholder value by pursuing a sale of the company. This Smart News Release features multimedia. View the full release here: http://www.businesswire.com/news/home/20161114005388/en/
(Graphic: Business Wire)
The full text of the letter follows: Nancy KarchChairman of the BoardKate Spade & Co2 Park AveNew York, NY 100016 cc: Kate Spade Board of Directors Dear Nancy, We are deeply concerned about the precipitous decline in the share price of Kate Spade over the last two and a half years brought about by management's inability to meet their own stated goals. The stock has now fully retraced the entire gains from when the former Fifth and Pacific first announced its intention to isolate Kate Spade as a stand-alone entity in early 2013. While we have long admired the growth prospects for the Kate Spade brand, we have become increasingly frustrated by management's inability to achieve profit margins comparable to industry peers. 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 11 th, 2014, we believe the best path for enhancing shareholder value is to pursue a sale of the company. We strongly believe that a strategic, industry player would be willing to pay a substantial premium to add this growth business to their portfolio. Over $3bn in equity value destroyed in the last two and a half years We first invested in Kate Spade back in 2009 under parent company Liz Claiborne solely on the basis that the stand alone value of Kate Spade was grossly mispriced inside an apparel conglomerate with other poor performing assets and high levels of debt. We argued back then for the break-up of the company and were gratified when the Board finally made the decision to act in 2013. Shareholders were rewarded as the stock surged above $40 over the following year. Since those successful moves, material shareholder value has been destroyed by wasting time, energy and money on the former sub brand Kate Spade Saturday and management has missed interim sales and margin targets on 3 different occasions.