Kors Airplane
Source: Michael Kors

The fashion world involves trends going in and out of style, and lately, Michael Kors Holdings (NYSE:KORS) has found its stock suffering from a mass exodus among shareholders. Even though the maker of accessories and other fashion items has seen extremely strong growth that puts competitors like rival Coach (NYSE:TPR) to shame, investors decided during the market's major pullback in September and early October that Kors and similar high-growth favorites had come too far too fast. The big question Kors now faces is whether the company's earnings will grow fast enough to get momentum investors excited about the stock again.

For years, Kors defied a sluggish economic recovery among most mainstream retail stocks, with its emphasis on high-end luxury shoppers paying off. Moreover, Kors has done a good job in distinguishing itself from Coach and other luxury retailers, with attention to brand-name detail that has led to such strong growth. But with the stock off more than 20% from its highs earlier this year, Kors needs to demonstrate its ability to keep growing as quickly as possible in order to satisfy its shareholders. Let's take an early look at what's been happening with Kors over the past quarter and what we're likely to see in its report.

Stats on Michael Kors Holdings

Analyst EPS Estimate

$0.89

Change From Year-Ago EPS

25%

Revenue Estimate

$977.49 million

Change From Year-Ago Revenue

32%

Earnings Beats in Past 4 Quarters

4

Source: Yahoo! Finance

What can Kors investors expect from earnings?
Despite the stock's drop, Kors investors remain optimistic about its earnings prospects, as their estimates for the full 2015 fiscal year have risen by more than a dime per share in the past few months. Yet the stock hasn't been able to regain any ground, falling 4% since late July.

The biggest issue Kors is facing right now is the prospect of slowing growth. In its fiscal first-quarter results, Kors produced impressive gains of 24.2% in comparable-store sales, and the retailer's massive international expansion pushed overall revenue up a whopping 43%. Net earnings climbed by more than 50%, and the company's efforts in Europe and Japan paid off especially well.

Kors Handbag

Source: Michael Kors

Yet Kors has had to rein in even more ambitious expectations from investors. Of particular worry was the fact that Kors anticipates comps to fall into the high teens as early as the just-ended quarter. In last quarter's conference call, Kors noted that its high gross margins and operating margins were "unsustainable," and so it argued that the guidance it gave wasn't anything that should have surprised shareholders. Yet Kors investors have long enjoyed the faster growth that the retailer has produced and don't want to consider the possibility that its highest-growth days are already behind hit.

That said, Kors isn't giving up on growth. By emphasizing high-return, high-potential areas like watches, jewelry, and menswear, Kors hopes to make the most of what could become its most lucrative markets. At the same time, working on its e-commerce presence should also help Kors, and bringing its website's launch in-house should boost accountability and improve responsiveness.

As painful as the stock's drop has been this year, Kors now offers a much more attractive valuation than it did at the height of its popularity. Although it still sports earnings multiples above what Coach and Ralph Lauren (NYSE:RL) have, Kors' superior growth prospects still offer better value in many investors' eyes -- even if that growth does indeed continue to decelerate.

In the Kors earnings report, be sure to watch how the retailer responds to changing conditions within the luxury retail industry. With Coach having beaten the low expectations that investors set for it last week, Kors will want to demonstrate its continued superiority over its rival. As Coach continues to lose market share, Kors has a huge opportunity to deliver a knockout blow to its competitors and get its stock price moving in the right direction again.

Dan Caplinger owns shares of Apple. The Motley Fool recommends Coach, Apple, and Michael Kors Holdings. The Motley Fool owns shares of Coach, Apple, and Michael Kors Holdings. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.