Unless you've been sleeping under a pair of Jordache jeans for the past quarter, you're fully aware that Coach (TPR -2.11%) is falling out of favor with consumers. What started as flat sales growth a little over a year ago is now a cascading waterfall. In that time, Michael Kors (CPRI -2.12%) has been posting scintillating growth. It's not that luxury handbags and accessories are out of fashion. Shoppers are just swapping out Coach for MK labels. 

We saw the surge of Kors continue this morning. Revenue soared 54% to $917.5 million, fueled by a 56% spike in wholesale net sales and a combination of brisk expansion and a 26.2% uptick in comps delivering a 50% gain in retail net sales. 

Once again, the pros didn't have a clue. They were holding out for an average of $816.2 million, and even the most optimistic of the 23 major analysts modeling the high-end brand's business only forecasted revenue of $891.7 million. This is exactly what happened three months ago when none of the Wall Street pros figured it would crack $1 billion during the seasonally potent holiday quarter. It did.

Margins improved on the way down the income statement to the point where net income improved 59% to $161 million, or $0.78 a share. If analysts were off the mark on the top line, it's a safe bet that they blew it on the bottom line with improving margins. They did. Wall Street was only holding out for net income of $0.68 a share. The surprise isn't really a surprise to those that have seen Kors routinely blast analyst targets away every quarter since going public three years ago.

Kors' success has been bad news for Coach. Its last quarter was another disaster with North American retail comps plunging 21%. Improvement overseas and in product lines outside of its flagship handbags and accessories wasn't enough to spare investors from another horrendous quarter.

It's hard to tag either company as a bellwether here. After all, reality of the luxury market falls somewhere between the slide at Coach and the rapid ascent of Kors. 

The market doesn't seem to learn, clinging to the hope that Coach is going through a temporary phase. Yes, the stock is near the three-year low that it hit earlier this month, but it still seems as if the stock keeps getting whacked after every quarterly report. We've seen this happen again and again and again and again. Coach has its juicy dividend, but how sustainable is the yield if its business keeps going the wrong way?

This should also be a cautionary tale for Kors bulls. Right now, it's on top of the world. It has increased its retail base by 33% over the past year alone by opening another 101 stores. This is great when comps are booming, but there comes a point when having too many stores dilutes the prestige of a luxury brand. This certainly doesn't mean the party is over. History has been cruel to those that ignore the positive momentum of Kors and the negative momentum at Coach. However, fashion and luxury brands are fickle. When the party ends for Kors -- and it may be in a quarter, a year, or several years -- you will want to make sure that you're not in the same camp of deluded Coach fans arguing that the lull is temporary.