David’s Bridal plans to spin off its artificial intelligence platform, Pearl, into a stand-alone publicly traded company with a target valuation of about $350 million, CNBC has learned exclusively.
The company expects the deal to close in the first half of 2027.
David’s Bridal filed a nonbinding letter of intent on Friday to separate out Pearl. The AI-centric business will own David’s Bridal’s intellectual property and will build on its ever-evolving AI model, while the original company will try to strengthen its physical retail business.
“We have a fast-growing, high-margin business that generates positive cash flow today at Pearl, and going public now will help us attract talent and give us more options to fuel the growth we believe in,” David’s Bridal. CEO Kelly Cook, who will become CEO of Pearl after the deal closes, told CNBC in an interview.
Cook said the companies will work together to serve customers throughout the wedding planning process, adding that the split “positions both companies for strategic growth.”
Pearl’s services include an agent AI-powered wedding planning platform, proprietary tools to streamline appointments and communication and a network of digital content with original programming. It uses AI to personalize advice based on data collection for each client.
David’s Bridal expects Mutiara to generate an EBITDA margin of more than 30% this year and predicts revenue growth of more than 100% by 2027, exceeding $85 million. It is expected to be debt-free after the deal closes and have positive free cash flow for the next two years, according to the company.
“Pearl has earned the right to stand alone because it created more value than we expected,” Cook said.
Following the transaction, Pearl will own David’s Bridal intellectual property and license it back to the chain.
“It’s a very healthy business model,” Cook said.
He added that demand remains strong for both businesses. Grand View Research estimates the US wedding services market will top $96 billion by 2026 – and David’s Pearl and Bridal wants to be at the forefront of that segment.
The company will continue to have “relationships built on reciprocity,” he said, sharing proprietary data and pointing customers to other businesses for the next step in their wedding planning. The separation will allow each company to refine its focus, he added.
Still, the plan to go public comes as AI stocks have struggled. The initial public offering market for consumer companies has not been doing well, more companies are delaying their public debuts and investors are starting to lose faith in the AI boom.
Cook said the difference for Pearl is that the company is “not AI for AI’s sake.”
“Most AI companies have to find customers,” he said. “We already have them … we have their information, and it’s less about the AI side and more about modernizing this whole ecosystem for them that needs modernizing.”
David’s Bridal is no stranger to financial struggles. The company filed for bankruptcy protection in 2018 and emerged a few months later. It then filed for the second time in 2023, citing a significant business slowdown from the pandemic and high inflation. To save itself, the company then sold its business to an asset manager Cion Investment Corp. Stock price history to prevent death.
As part of the spinoff deal, Cion has proposed to invest $25 million as an anchor investor in a separate company.
Cook, who took over as CEO last year to help transition the legacy retailer to a more cohesive online and in-store experience, said the company “has been going through some tough times,” but that the struggles led to the decision to split the business.
“It’s not a secret, we’ve talked about it openly,” he said. “What’s amazing is what comes out of that process is a leaner David, a more focused David…