What: Shares of Michael Kors Holdings Ltd. (CPRI -1.49%) were up more than 25% Tuesday after the luxury fashion and apparel specialist reported better-than-expected fiscal third-quarter 2016 results.

So what: Quarterly revenue rose 6.3% year over year (9.9% at constant currency) to $1.4 billion. That included an 11.1% increase in retail net sales (15.7% at constant currency) to $766.2 million, as a 0.9% comparable-store sales decline more than offset growth in e-commerce sales and sales from 114 net new store openings over the past year. To Michael Kors' credit, comparable-store sales would have increased 2% had it not been for the negative impact of foreign exchange.

On the bottom line, that translated to a 3% decline in net income to $294.6 million, and -- thanks to share repurchases over the past year, including 4,682,121 shares repurchased for roughly $200 million during the quarter -- a 7.4% increase in net income per diluted share to $1.59.

Analysts, on average, were anticipating lower revenue of $1.36 billion would result in net income of $1.46 per share.

"We are pleased with our third quarter results, as we delivered revenue, comparable store sales and earnings growth ahead of our expectations," explained Michael Kors CEO John Idol. "Our performance was driven primarily by strong consumer response to our luxury fashion product offering, particularly in our accessories and footwear categories, the continued momentum in our digital flagship business and outstanding growth in our international markets."

Now what: For the current quarter, Michael Kors anticipates revenue of $1.13 billion to $1.15 billion, including flat comparable-store sales on a reported basis, and good for high-single-digit percentage growth on a constant currency basis. Earnings per diluted share are expected to be $0.93 to $0.97. By contrast, analysts' consensus estimates called for higher revenue of $1.16 billion and higher earnings of $1.00 per share.

Given its relative outperformance in fiscal Q3, however, Michael Kors now expects full fiscal 2016 revenue to be approximately $4.65 billion, good for low-double-digit growth on a constant currency basis, with diluted EPS for the year coming in at $4.38 to $4.42. Wall Street's consensus predicted full fiscal 2016 earnings of $4.33 per share on revenue of $4.63 billion.

In the end, it's no surprise investors are willing to overlook Michael Kors' guidance shortfall in the current seasonally slower period, especially given its strong showing in the crucial holiday quarter. If Michael Kors can sustain this momentum going forward, and with shares still trading below both trailing-12-month earnings and next year's estimates, I see no reason Michael Kors stock won't continue to rise from here.