Source: Michael Kors.

Michael Kors (NYSE:CPRI) announced truly explosive financial performance for the first quarter of fiscal 2014 on Wednesday. Competitor Coach (NYSE:TPR) will be trying to recover some ground over the coming months, while Kate Spade (NYSE:KATE) is becoming a relevant challenger to watch in the sector. However, Michael Kors looks strong enough to withstand the competition and continue growing at full speed in the years ahead.

Looking good
Total sales during the quarter ended on Mar. 29 increased by an impressive 53.6% to $917.5 million, comfortably above Wall Street estimates of $818.1 million in sales for the quarter.

Retail sales grew 49.7% to $408.4 million on the back of a 26.2% increase in comparable-store sales and 101 net new store openings during the year. Wholesale sales jumped 55.5% to $473.7 million and licensing revenues increased 79.1% to $35.4 million.

Sales in North America grew 43% versus the prior year, driven by a 20.6% increase in comparable-store sales. Europe was even stronger, with a 125% increase in revenues during the quarter and an extraordinary increase of 62.7% in comparable-store sales.

Source: Michael Kors.

Michael Kors delivered expanding profit margins during the quarter and gross profit as a percentage of sales increased to 59.9%, compared to 59.7% in the fourth quarter of fiscal 2013. Operating margin was 26.8% of sales, versus 26% of revenues during the same period in 2013.

Earnings per share came in at $0.78 per diluted share, a big increase of 56% versus $0.50 per diluted share in the same quarter during the prior year, and considerably better than the $0.68 per share forecasted on average by analysts.

Forward guidance was also above expectations. For fiscal 2015, Michael Kors forecasts sales to be between $4.0 billion and $4.1 billion, assuming a comparable-store sales increase in the high teens during the year. Diluted earnings per share are expected to be in the range of $3.85 to $3.91, which compares favorably versus analyst forecasts of $3.85 for the year.

Michael Kors opened 150 additional retail stores, including concessions operated through licensing partners, during the year. Including licensed locations, there are 555 Michael Kors stores around the world as of the end of the fourth quarter of fiscal 2014.

Michael Kors versus Coach and Kate Spade
The biggest risk for investors in Michael Kors is the always-changing and competitive landscape in the fashion business. While Coach is trying to make a comeback with its renewed collection over the coming months, Kate Spade is generating impressive growth lately.

Coach has overexpanded its store base, and excessive pricing promotions have diluted the company's brand value. In this context, Coach announced a worrisome decline of 7% in sales during the quarter ended on March 29. North America was a particularly dismal market for Coach during the period, as sales declined by 18% to $648 million in that region.

Coach's new creative director, Stuart Vevers, is working on reinvigorating the brand, and his new collection was introduced at New York Fashion Week in February. According to management: "The collection got a significant attention and the global press was uniformly positive bringing Coach into the fashion conversation."

Source: Michael Kors.

Coach's new collection will be reaching stores in September, and investors in Michael Kors should monitor customer reaction and sales performance in order to evaluate if Coach has any chances of recovering some of the ground it has lost over the last few years.

Kate Spade is materially smaller than both Coach and Michael Kors, but it is generating remarkable performance in its main Kate Spade brand division. Total sales from continuing operations in the first quarter of 2014 came in at $328 million, an increase of 33.5% versus the first quarter of 2013.

The Kate Spade brand was particularly strong during the period, with revenues increasing 54% to $217 million. Average Kate Spade retail square footage, including concessions, was approximately 350 thousand square feet by the end of the quarter, a 42.2% increase compared to 2013. In addition, comparable direct-to-consumer sales of Kate Spade products increased 29% year over year.

Considering the impressive growth rates delivered by both Michal Kors and Kate Spade, it looks like there is enough room for the two companies to thrive in the high-end fashion and accessories industry. Still, Kate Spade is certainly not a competitor to disregard in the middle term.  

Foolish takeaway
Michael Kors is clearly firing on all cylinders and delivering impressive growth rates for investors. While Coach is trying to make a comeback and Kate Spade is a significant challenger to watch, it is consolidating its position as one of the most valuable and demanded brands in the affordable luxury segment. This trendy fashion company looks dressed for success.