Kate Spade shares looked just as bright as the company’s handbags on Tuesday after a report that said the company was awaiting first-round bids.

Shares in the New York-based company advanced 5.5 per cent to $19.82 — the biggest one day rise since December — after Bloomberg, citing DealReporter, said the bids could come this month.

A spokesperson for the company said “we do not comment on industry rumors or speculation”.

The company, which is best known for its quirky and colourful wallets and handbags and traces its beginnings to 1993, was urged to put itself on sale by New York-based hedge fund Caerus Investors in November. At the time, the hedge fund, managed by Ward Davis and Brian Agnew, pushed for a sale citing the decline in shares over the previous two years that had been brought about by “management’s inability to meet their own stated goals”.

Hopes of a sale helped lift Kate Spade’s shares by 5 per cent last year following a near 45 per cent drop in 2015.

While Kate Spade’s profit and sales growth have topped that of rivals Coach and Michael Kors, and the company is targeting $4bn in retail sales, sentiment on the stock has dampened on concerns about a challenging retail environment, weaker tourist traffic and as its profit margins have declined.

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