Why Michael Kors Holdings Ltd. Stock Plunged Today

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What's happening:Shares of Michael Kors Holdings Ltd. were down 23% as of noon Wednesday after the fashion accessories and apparel retailer reported weaker than expected fiscal fourth-quarter 2015 results and disappointing guidance.

Quarterly revenue rose 17.8% year over year (or 23.2% on a constant-currency basis) to $1.08 billion. For that, investors can thank the combination of Michael Kors' recently launched U.S. e-commerce site, and a 14.9% increase in retail sales to $469.4 million. However, the latter figure was driven entirely by 121 net new store openings over the past year, and held back by a 5.8% decrease in comparable-store sales. The results were slightly more encouraging on a constant-currency basis, where retail net sales increased 21.1% and comps declined 1.7%.

Meanwhile, Micahel Kors' net income climbed 13.4% year over year to $182.6 million, and 15.4% on a per-share basis to $0.90. Note Michael Kors repurchased 1.4 million shares during the quarter for roughly $92 million.

Analysts, on average, were calling for roughly the same revenue of $1.08 billion, but with slightly higher earnings of $0.91 per share.

Why it's happening:"While we were faced with a number of headwinds in the fourth quarter," explained Michael Kors CEO John Idol, "we were pleased with the strong performance across our segments and geographies.We believe that our results demonstrate the strength of the Michael Kors brand as our luxury products continue to resonate with consumers worldwide."

That said, Idol went on to describe fiscal 2016 as "a year of strategic investments" as the company develops its "powerful platform to support the numerous growth initiatives that are now under way." Those initiatives includes further international expansion, more new e-commerce sites, and additional new brick-and-mortar locations and "shop-in-shop" wholesale channel venues.

As a result, Michael Kors anticipates current quarter revenue to be $930 million to $950 million, including a mid-single-digit comparable-store sales decrease. That should translate to diluted earnings per share of $0.74 to $0.78. But again, Wall Street was hoping for higher earnings of $1.03 per share on revenue of $1.09 billion.

Finally, for the full fiscal year 2016 Michael Kors expects revenue of $4.7 billion to $4.8 billion, or a low- to mid-teens increase and assuming a $200 million impact from foreign exchange. Diluted earnings per share are expected to be $4.40 to $4.50, including a $0.20-per-share impact from currencies. Consensus estimates called for earnings and revenue of $4.70 per share and $5.05 billion, respectively.

It's encouraging that foreign exchange headwinds won't last forever and aren't indicative of deeper problems with the business. But keep in mind Michael Kors' outlook on a constant-currency basis still wouldn't have lived up to expectations. In the end, while the drop might be overblown, that's why it's still hard to blame the market for taking a step back today.

The article Why Michael Kors Holdings Ltd. Stock Plunged Today originally appeared on Fool.com.

Steve Symington owns shares of Apple. The Motley Fool recommends Apple and Michael Kors Holdings. The Motley Fool owns shares of 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.