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The potential buyers contacted include retailers, the newspaper
reported, adding that the process was at an early stage.
Shares of Kate Spade, which had a market value of $1.86 billion
as of Tuesday's close, were up 16 percent at $16.83 after being
halted twice.
The company did not immediately respond to a request for
comment.
Hedge fund Caerus Investors said last month that the company
would make a great acquisition candidate as its stock was
trading at a discount to its peers.
Sales of handbags have weakened over the past year in the United
States, as people shop lesser at department stores in favor of
online shopping. Lower spending by tourists, due to a strong
dollar, has also hurt sales.
In response, handbag makers such as Coach Inc and Michael Kors
Holdings Ltd are tightening supplies to department stores and
also exploring deals.
Coach made multiple takeover offers for British luxury fashion
brand Burberry, but was rejected, the Financial Times reported
this month.
As of Sept. 13, 2015, Caerus had a 0.03 percent stake in Kate
Spade, according to a regulatory filing. The small New York
hedge fund has not provided details of its shareholding since
then.
Activist investor Barry Rosenstein's Jana Partners LLC also
revealed a stake in the company last month, saying it held a
0.85 percent of Kate Spade's shares.
Kate Spade, known for its quirky and colorful satchels and
totes, reported lower-than-expected quarterly same-store sales
last month and said pricing competition would likely dampen
earnings during the holiday shopping quarter.
Up to Tuesday's close, Kate Spade's stock had fallen 18.4
percent this year.
(Reporting by Aravind K and Sruthi Ramakrishnan in Bengaluru;
Editing by Maju Samuel and Anil D'Silva)
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