Image source: Michael Kors Holdings Limited.
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So what:Fossil shares plunged more than 30% on May 11, 2016, after the watch maker not only revealed that quarterly revenue fell 9% year over year, but also issued disappointing guidance for current-quarter revenue to post a similar decline. At the time, Fossil management blamed "persistent headwinds pressuring the traditional watch category and the challenging retail environment," which in turn cultivated concerns for whether Fossil's peers -- notably including Michael Kors -- would suffer similar weakness.
Michael Kors shareholders were found guilty by association that day, with their stock falling nearly 12% in response:
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Now what:If Michael Kors' encouraging quarterly results
More importantly, Michael Kors CEO John Idol noted that his company "delivered continued growth across regions despite the challenging retail environment," thanks in part to a positive response from consumers to both its elevated product offerings and refreshed marketing campaigns.
As of this writing, Michael Kors shares have rebounded nearly 11% since Tuesday's close. Assuming Michael Kors Holdings can sustain this momentum in the face of today's difficult retail environment, it should emerge even stronger for it once those headwinds abate, and it will be well positioned to drive market-beating returns from here.