Handbag and accessories maker and retailer Kate Spade & Co, under pressure from activist investor Barry Rosenstein, is working with a bank to sound out possible buyers.

Quoting insiders, the Wall Street Journal says potential buyers contacted include retailers, with the process at an early stage.

Rosenstein’s Jana Partners already has a minor stake in the company.

Kate Spade has a market value of about $1.86 billion, but sales have dropped as the demand for handbags has weakened over the past year in the US, with people shopping less often at department stores and tourists spending less because of a strong dollar.

Known for its quirky and colourful satchels and totes, Kate Spade was expecting dampened earnings over the holiday shopping quarter because of pricing competition.