David's Bridal to Spin Off AI Unit Pearl at $350 Million Valuation

David's Bridal plans to spin off its artificial intelligence platform, Pearl, into a stand-alone publicly traded company at a target valuation of roughly $350 million, CNBC learned exclusively. The company filed a nonbinding letter of intent on Thursday and expects the deal to close in the first half of 2027.

CEO Kelly Cook, who will take over as CEO of Pearl after the deal closes, frames the move as a land grab for talent and capital. "We have a fast-growing, high-margin business generating positive cash flow right now in Pearl, and going public now will help us attract the talent and give us more optionality to fuel the growth that we believe that we have," Cook told CNBC in an interview.

What does the split actually change?

Pearl gets the intellectual property. David's Bridal keeps the stores. Following the transaction, Pearl will own David's Bridal's IP and license it back to the chain. Cook called it "a very healthy business model." She said the companies will work hand in hand to serve customers throughout the wedding-planning process, and described the split as "positioning both companies for strategic growth."

The AI-centered business will build on its growing AI model, while the original company sharpens its physical retail business.

Pearl's current stack includes:

• An agentic AI-powered wedding-planning platform
• A proprietary tool that streamlines appointments and communications
• A digital content network with original programming

Pearl uses AI to personalize suggestions based on the data it collects on each client.

What are the numbers behind the spinoff?

The projections are aggressive. David's Bridal expects Pearl to generate an EBITDA margin of more than 30% this year and projects revenue growth of more than 100% in 2027, exceeding $85 million. The company expects Pearl to be debt-free after the deal closes and to run positive free cash flow over the next two years.

"Pearl has earned the right to stand on its own because it's created more value than we've expected," Cook said.

The market backdrop supports the ambition, at least on paper. Grand View Research estimates the U.S. wedding services market will top $96 billion in 2026, and both Pearl and David's Bridal want to be at the forefront of that segment. Cook said demand remains strong for both businesses, and that the two will keep a "relationship built on reciprocity" — sharing proprietary data and pointing customers to the other business for the next steps in their wedding planning.

Why go public now, when AI stocks are struggling?

The timing cuts against the deal. AI stocks have been struggling, the IPO market for consumer companies has been lackluster, more companies are postponing their public debuts, and investors are beginning to lose confidence in the AI boom.

Cook's answer: Pearl isn't chasing the AI trend, it already owns the customer. The differentiator, she said, is that the company is "not AI for AI's sake."

"Most AI companies have to find a customer," she said. "We already have her ... we have her information, and it's less about the AI side and more about modernizing this entire ecosystem for her that desperately needed modernization."

Who is backing the deal?

Cion Investment Corp., the asset manager that bought David's Bridal to save it from shutdown after its 2023 bankruptcy, has proposed to invest $25 million as an anchor investor in the separate company.

The bankruptcy history is long. David's Bridal filed for bankruptcy protection in 2018 and emerged a few months later. It filed a second time in 2023, citing a significant business slowdown from the pandemic and high inflation, then sold itself to Cion to avoid a shutdown.

Cook, who joined the company last year to lead its transition from a legacy retailer to a more cohesive online and in-store experience, said the company has "been through a hard chapter," but that those struggles led to the decision to split the business.

"That's no secret, we've talked about that openly," she said. "What's extraordinary is what came out of that process is a leaner David's, a more focused David's ... I think it's a move from strength."

The bet now is that a debt-free, cash-flow-positive AI unit with a built-in customer base can command public-market respect in a sector losing it — and do so before the $96 billion wedding market consolidates around someone else's platform.