Kate Spade says it is exploring strategic alternatives

Kate Spade shares shot up Thursday after the handbag maker confirmed it's exploring

It has hired Perella Weinberg Partners and Paul, Weiss, Rifkind, Wharton & Garrison to help consult on its options.

The company's North American net sales were up 9.5% to $407 million compared to the same period in 2015, and worldwide business reached $59 million, an increase of 12.4%.

Kate Spade's fortunes took a swift downturn earlier this year when the company went from reporting double-digit same-store sales increases to lowering its full year forecast, blaming a slowdown in outlet store sales, which forced deeper discounts.

Kate Spade used to be part of Fifth & Pacific Cos. and Liz Claiborne, but as various brands under the parent company faltered and were sold off, its name was changed to reflect the shining Kate Spade.

Kate Spade's net income rose 32.7 percent to $85.55 million, or 66 cents per share, in the quarter.

"Our solid fourth quarter and fiscal year performance demonstrate the strength of our differentiated business model, as we continued to gain market share and deliver strong growth despite a challenging retail environment", CEO Craig Leavitt said.

In Thursday's announced, Kate Spade's board of directors said it plans to "proceed in a timely manner" but has not set a timetable for completion of this process.

In the statement, the company also confirmed that it was reviewing strategic alternatives to enhance shareholder value. They also made clear that "there can be no assurance" a deal can be made, and it will not provide guidance or any updates on the possible transaction until it has come to a conclusion.

With shares of Kate Spade up some 50 percent since chatter started swirling about a potential sale in December, short interest has simultaneously shot higher.

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Want the latest recommendations from Zacks Investment Research? On the 7th day After Earnings Report, the stock hit its share price as $15.7 by showing -3.86% decrease from the Stock price Before Earnings were reported.

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