Michael Kors Holdings Ltd. Earnings: Can It Dodge the Carnage in Retail?

On Wednesday, Michael Kors Holdings (NYSE: KORS  ) will release its quarterly report, and investors remain confident that the high-end handbag and accessories retailer can keep its long trend of outperformance going. Even though lower-end retailers have largely gotten crushed in recent months and even though that weakness has continued to hit rival Coach (NYSE: COH  ) , signs of success from luxury jeweler Tiffany (NYSE: TIF  ) point to the continued resilience of the rich shoppers that Kors has targeted as its primary customer base.

Michael Kors has positioned itself as more than just a retailer of handbags and accessories. Instead, Kors aims to portray a certain lifestyle brand, exuding the sense of luxury just from its product line. That approach has been wildly successful, making Kors a force to be reckoned with from a brand-name standpoint and leaving Coach running for cover as its business deteriorates. Still, some are worried about the general trend against retail during the harsh winter quarter. Will Kors be able to follow Tiffany's lead in taking full advantage of economic strength from luxury consumers? Let's take an early look at what's been happening with Michael Kors Holdings over the past quarter and what we're likely to see in its report.

Stats on Michael Kors Holdings

Analyst EPS Estimate

$0.68

Change From Year-Ago EPS

36%

Revenue Estimate

$815.3 million

Change From Year-Ago Revenue

37%

Earnings Beats in Past 4 Quarters

4

Source: Yahoo! Finance.

Will Kors earnings keep crushing the competition?
Analysts have held steady on their views of Michael Kors earnings in recent months, with the only minor move being a single-penny boost in fiscal 2015 projections. The stock has paused in its run-up, however, falling 2% since late February.

Michael Kors' fiscal third-quarter earnings report sustained the incredible pace of the retailer's growth, showing what a huge force it has become in the industry. Revenue soared 59%, topping the $1 billion mark for the quarter for the first time ever on same-store sales gains of 27.8%. That was a faster pace than the two previous quarters, and Kors expects more of the same, projecting 15% to 20% gains in comps for its most recent quarter.

Source: Michael Kors.

But Kors has a longer-range plan toward even greater growth. Kors wants to become a retail force worldwide, and it's expanding at a strong pace in order to meet demand in all the most lucrative markets across the globe. In particular, Kors hopes to almost double its current store count over the next several years, maintaining its concentration on company-owned locations from which shareholders can reap the greatest rewards from Kors' ongoing success. By looking even at economically weak Europe for expansion, Kors is using its sterling reputation to bolster its own growth prospects.

By contrast, Coach has utterly failed to keep up with Kors in its key markets. Same-store sales in North America at Coach fell 21%, and even though Coach has had some success with growth in international sales, Kors has simply taken away the fashion reputation that Coach used to enjoy. Just as Tiffany can command a premium over other jewelers -- even those that cater to the upper-crust consumer -- so too has Kors demonstrated its ability to surpass Coach and win over former Coach customers.

The key question is how far Kors can rise. Kors has used social media and online search to its advantage, staying current with the newest ways to reach retail customers. There's always the chance that Kors will overextend itself in its expansion plans, but for now, it appears that consumers can't get enough of the company.

In the Kors earnings report, watch to make sure the retailer stays on track with its high-growth trajectory. Any break in Kors' dominance could come as a huge shock to bullish investors, but few signs point to any significant probability of the company disappointing its shareholders.

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